[SEOUL] Samsung Electronics and SK Hynix shares slid on Monday (Sep 1) after the Trump administration decided to make it harder for the world’s largest memory chipmakers to ship critical equipment to their giant Chinese operations.
The surprise ruling deals a potential blow to their production in the world’s largest semiconductor market. While both South Korean companies have memory plants in South Korea, China accounts for a major slice of their global output. Samsung sank more than 2 per cent, while SK Hynix stock was more than 4 per cent lower in morning trading.
Samsung and Hynix compete with Micron Technology to make key components for most electronics from Apple iPhones to Nvidia AI servers. The pair had operated in China under regulations that allow them to import chipmaking equipment without applying for a new license each time. They now have 120 days until the waiver expires, according to an announcement in the US Federal Register. Companies can seek licenses to continue operations.
The Trump administration’s move would revise what’s known as the validated end user, or VEU, rules, handicapping the ability to make chips in the country and jeopardising Beijing’s access to certain technologies.
Those waivers date back to 2023 when then-president Joe Biden’s administration moved to allow the South Korean chipmakers to acquire the equipment they need to sustain and expand their giant operations in China. Washington effectively granted an indefinite waiver on broader restrictions banning the shipment of advanced chipmaking gear to the country.
SK Hynix said on Friday it would “maintain close communication with both South Korean and the US governments and take necessary measures to minimise the impact on our business”. Samsung did not respond to a request for comment.
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“The Trump administration is committed to closing export control loopholes – particularly those that put US companies at a competitive disadvantage,” Under Secretary of Commerce Jeffrey Kessler, who oversees export control programmes, said. “Today’s decision is an important step towards fulfilling this commitment.”
The US decision emerged days after US President Donald Trump met his South Korean counterpart, President Lee Jae Myung, at the White House. In their meeting, the two men discussed a recently sealed agreement that set tariffs on South Korean goods at 15 per cent, sparing the country from the 25 per cent that Trump had threatened.
The removal of the waiver will have a small impact on the market for semiconductor machinery, according to research from Bernstein. Non-Chinese companies only spent about US$2 billion on new gear for their factories in that country in 2024, accounting for less than 2 per cent of total industry sales on equipment last year.
Plants in China owned by overseas companies do have an outsized influence on memory chip supply, though. They account for 10 per cent of computer memory output and 15 per cent of storage chips, according to the report. BLOOMBERG
