[BENGALURU] The US Department of Commerce is considering revoking authorisations granted in recent years to global chipmakers Samsung, SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC), making it more difficult for them to receive US goods and technology at their plants in China, according to sources familiar with the matter.

The chances of the United States withdrawing the authorisations are unclear. But with such a move, it would be harder for foreign chipmakers to operate in China, where they produce semiconductors used in a wide range of industries.

A White House official said the United States was “just laying the groundwork” in case the truce reached between the two countries fell apart. But the official expressed confidence that the trade agreement would go forward and that rare earths would flow from China, as agreed.

“There is currently no intention of deploying this tactic,” the official said. “It’s another tool we want in our toolbox in case either this agreement falls through or any other catalyst throws a wrench in bilateral relations.”

Shares of US chip equipment makers that supply plants in China fell when The Wall Street Journal first reported the news earlier on Friday (Jun 20). KLA dropped 2.4 per cent, Lam Research fell 1.9 per cent and Applied Materials sank 2 per cent. Shares of Micron, a major competitor to Samsung and SK Hynix in the memory chip sector, rose 1.5 per cent.

A TSMC spokesperson declined to comment. Samsung and Hynix did not immediately respond to requests for comment. Lam Research, KLA and Applied Materials did not immediately respond, either.

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In October 2022, after the United States placed sweeping restrictions on US chipmaking equipment to China, it gave foreign manufacturers such as Samsung and Hynix letters authorising them to receive goods.

In 2023 and 2024, the companies received what is known as Validated End User (VEU) status in order to continue the trade.

A company with VEU status is able to receive designated goods from a US company without the supplier obtaining multiple export licenses to ship to them. VEU status enables entities to receive US-controlled products and technologies “more easily, quickly and reliably”, as the Commerce Department website puts it.

The VEU authorisations come with conditions, a source familiar with the matter said, including prohibitions on certain equipment and reporting requirements.

“Chipmakers will still be able to operate in China,” a Commerce Department spokesperson said in a statement when asked about the possible revocations. “The new enforcement mechanisms on chips mirror licensing requirements that apply to other semiconductor companies that export to China and ensure the United States has an equal and reciprocal process.”

Industry sources said that if it became more difficult for US semiconductor equipment companies to ship to foreign multinationals, it would only help domestic Chinese competitors.

“It’s a gift,” one said. REUTERS