US pushes to restrict the import of American semiconductor equipment to Samsung and SK's factories in China

Introduction: A New Phase in Technological Hegemonic Competition

Recently, the U.S. government has been considering a new set of regulations targeting semiconductor factories in China owned by Samsung Electronics, SK Hynix, and Taiwan's TSMC. The core of this proposal is to abolish the 'Verified End User (VEU)' provision that has been exceptionably allowed until now, requiring individual permits each time advanced semiconductor equipment is brought into China. While the U.S. Department of Commerce has stated that this is not a finalized matter, it is reported that the relevant companies have already been informed of this policy direction. This indicates a significant turning point, extending beyond simple export controls, with the U.S.-China technology hegemonic competition directly impacting allied companies.

The specific content of the regulation and the intentions of the United States

The United States has been gradually strengthening semiconductor technology controls against China since 2022. At that time, while banning the export of advanced equipment and technology from U.S. companies, it provided a breathing space for allied companies such as Samsung Electronics (Xi'an), SK Hynix (Wuxi), and TSMC (Nanjing) through an exception clause known as VEU. Thanks to this, these companies were able to bring in equipment necessary for production to China without a separate approval process. However, recently, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) has proposed to abolish this VEU clause. This is essentially a strong expression of the will to fundamentally block the use of U.S. technology in the production of advanced semiconductors within Chinese territory. No longer will even indirect technological contributions be tolerated. This move also serves as a response to China's control over the export of critical mineral resources such as rare earths and gallium. The United States is using 'semiconductor technology' as a weapon, while China is wielding 'strategic resources' to attack each other's vulnerabilities, creating a vicious cycle of retaliation. In the end, the U.S. is placing even the management activities of allied companies under the framework of regulation to maintain its technological hegemony.

Reaction of the semiconductor industry and the international community

Samsung Electronics and SK Hynix have not released an official statement, but serious concerns are spreading within the industry. The two companies have already invested substantial capital in their factories in China, and most of the core equipment on their production lines relies on American technology. If individual export licenses from the United States are delayed or denied, direct losses such as production disruptions and yield degradation will be inevitable. Particularly, if the supply of irreplaceable equipment like EUV (extreme ultraviolet) lithography machines is blocked, they may have to consider worst-case scenarios such as modifying production plans or scaling back operations in China in the long term. The governments of South Korea and Taiwan are expected to seek solutions with the United States through diplomatic channels. Given their past experience in negotiating a VEU suspension, they will likely aim to find compromises, such as maintaining exceptions or simplifying approval processes rather than imposing blanket regulations. However, within the U.S. government, opinions vary: the Department of Commerce advocates for stringent technology controls, while the Department of Defense and the State Department take a more cautious stance, considering their relationships with allies, making it difficult to predict the outcome of negotiations. Internationally, the phenomenon of a U.S.-led Western technology bloc and a China-centered self-reliant technology bloc is becoming increasingly pronounced. In this context, South Korea and Taiwan are forced to walk a difficult tightrope between economics (China) and security (the United States).

Expected Wavelength and Future Outlook

If this regulation comes to fruition, in the short term, the delay in the import of equipment for semiconductor production lines will cause a decline in production efficiency. In particular, equipment needed for cutting-edge processes below 5 nanometers is expected to face even stricter controls, which could have a cascading effect on the launch of new products and delivery schedules to clients. In the medium to long term, the restructuring of the global supply chain will accelerate. Companies will have no choice but to accelerate their 'decoupling from China' strategy by establishing new production bases in regions outside of China to reduce risks. Conversely, China will use this as an opportunity to promote the development of domestic equipment. Chinese firms such as SMIC and YMTC are already focusing their efforts on domestic equipment localization under substantial government support. Diplomatically, the trust between the United States and its allies will be put to the test. Even if there is agreement on the U.S. goal of maintaining technological hegemony, if the methods directly infringe on the interests of allied companies, it could create fractures in long-term cooperative relationships.

Conclusion: An Era Where Technology Determines Diplomacy

The tightening of semiconductor equipment export regulations by the United States is a geopolitical issue intricately woven with technology, security, diplomacy, and industrial policy. Including allied companies in the regulations clearly demonstrates how resolute the U.S. is regarding technology controls. Now, semiconductor powerhouses like Korea and Taiwan must seek an increasingly sophisticated balance between technological security and economic interests. Advanced diplomatic skills that protect domestic corporate interests while maintaining strategic cooperation with the U.S. will determine national competitiveness. The era in which technology equates to diplomacy has officially begun, where the import approval of a single semiconductor piece of equipment can shake the world order.