The United States has revoked Samsung and SK Hynix’s authorizations to use American semiconductor equipment in China.

The South Korean chipmakers must now obtain licenses to buy US equipment for their Chinese facilities.

Intel also lost the authorization, but it had already sold its Dalian unit to SK Hynix earlier this year.

The change will take effect in 120 days and is expected to reduce sales for US equipment makers KLA Corp, Lam Research, and Applied Materials.

The revocation ends the companies’ Validated End User status, while the US and China remain under a tariff truce until November 2025.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Export controls create revenue challenges for US semiconductor equipment makers

The revocation of authorizations will likely hurt American equipment companies that have been major suppliers to China’s chip manufacturing operations.

U.S. equipment makers like KLA Corp, Lam Research, and Applied Materials saw their stock prices drop 2-3.7% immediately after the announcement, reflecting investor concerns about lost business1.

A Federal Reserve Bank of New York report found that export controls have already led to significant declines in revenue and profitability for affected U.S. firms, with companies struggling to find new buyers to replace lost revenue from Chinese clients2.

This situation highlights a tension in U.S. semiconductor policy: while export controls aim to limit China’s technological advancement, they also reduce revenue streams that American companies use to fund the R&D investments needed to maintain their competitive edge.

2️⃣ China’s heavy import dependence makes these restrictions strategically significant

The timing of these revocations targets a critical vulnerability in China’s semiconductor supply chain, where domestic production still falls far short of consumption needs.

China imported $350 billion worth of semiconductors in 2020, while its semiconductor self-sufficiency rate was only 16% that same year3.

This massive import dependence explains why restricting access to U.S. manufacturing equipment, essential for building advanced chip production facilities, could significantly impact China’s ability to increase domestic production capacity.