US to replace Samsung and SK hynix China fab VEUs with annual site licenses to limit upgrades

The U.S. plans to replace current VEU permissions for Samsung and SK Hynix’s China fabs with annual “site licenses.” These licenses will specify pre-approved yearly quantities of restricted tools, parts, and materials. The aim is to keep existing fabs running while blocking upgrades or expansions. VEUs expire at year-end. South Korean officials view this new rule as workable but are concerned about the added bureaucracy.

The origin of these export restrictions can be traced back to 2022, when the first controls targeted advanced logic (around 16nm FinFET), DRAMs (18nm half-pitch), and 3D NAND (128 layers or more). At that time, the VEU system granted Samsung and SK Hynix perpetual approvals, provided they met certain monitoring and security commitments.

Following the introduction of these controls, Biden-era waivers were issued to ease operations. Now, the new Trump administration is moving to close off what it sees as Biden-era “loopholes” by revoking VEUs and implementing yearly site licenses.

With the proposed system, companies could submit just one application each year, listing specific items and quantities. This change gives the U.S. more advance notice before shipments, but it makes planning harder for companies, especially since they cannot always predict when tools will break and need replacement parts. U.S. officials say urgent licenses can be processed quickly, though many in the industry doubt these claims.

These changes raise concerns about steady DRAM and NAND supply. If equipment fails mid-year or new shipments are delayed, smartphone and data-center parts could be affected, possibly leading to global shortages. This policy once again puts Seoul in a difficult position between its main ally and its largest trading partner.