The semiconductor industry is abuzz with the recent development concerning the U.S.’s Validated End User cVEUc designation for Samsung and SK hynix in China, set to expire on December 31, 2025. This crucial information has put a spotlight on the potential ramifications for these memory giants' operations moving forward.
Reports suggest that the situation has taken a somewhat favorable turn, as the U.S. has now outlined a system where equipment shipments will be permitted under an annual review process, deviating from the previously indefinite authorizations that were in place. This move comes after the U.S. Commerce Department introduced a “site license” proposal to Korean authorities, aiming to regulate the semiconductor equipment exports to these companies.
Under this newly proposed system, businesses are required to pre-submit details regarding the types and quantities of semiconductor equipment needed for the upcoming year. Subsequently, the U.S. government evaluates these requests and grants export approvals based on the submissions. While this approach aims to mitigate the risk of a complete VEU revocation, some concerns linger among industry experts as accurately forecasting equipment and component needs may prove challenging for companies.
A critical observation highlighted in the report points out that the exclusion of Samsung Electronics and SK hynix’s Chinese fabs from the VEU list could potentially demand up to 1,000 export approvals annually, even with the new approval system in place. This underscores the persistent operational uncertainties that these companies might face given the dynamic nature of the semiconductor industry.
Further complicating matters is the fact that Washington’s stance on prohibiting equipment exports for plant expansions or upgrades in China remains unchanged. Consequently, Korean chipmakers are now shifting their focus from expansion initiatives to prioritizing the efficiency and output of existing facilities in China, as highlighted by Global Economic.
In terms of their operations in China, TrendForce estimates that a substantial portion of Samsung’s total NAND output, around 30–35%, is projected to originate from the country by 2025. Similarly, SK hynix is expected to derive approximately the same proportion of its DRAM output and an even more substantial share, 40–45%, of its NAND production from China by the same year.
Business Post sheds light on Samsung’s current production figures, indicating that the tech giant churns out an estimated 270,000 NAND wafers per month across its Xi’an 1 and 2 plants. On the other hand, SK hynix’s Dalian site contributes about 100,000 wafers monthly to the company’s DRAM production.
Meanwhile, a report by Hankyung reveals that SK hynix’s Wuxi facility is unlikely to undergo significant process transitions in 2026, particularly steering clear of a move to 1b DRAM production. Instead, following the implementation of the 10nm-class 4th generation c1ac DRAM line in 2024, the Wuxi plant will persist in producing legacy DRAMs like 1z and 1a, reserving advanced lines such as 1b and 1c DRAMs for SK hynix’s Icheon and Cheongju facilities.
These developments underscore the intricate balance and strategic decisions that Samsung and SK hynix are making in navigating the evolving landscape of the semiconductor industry, especially in relation to their presence and operations in China. As the sector continues to witness dynamic shifts and regulatory changes, the adaptability and foresight of these companies will be paramount in sustaining their competitiveness and relevance in the global market.