Trump administration issues notice to restrict supply of US-made equipment to Samsung and SK's Chinese factories

The Donald Trump administration has announced plans to restrict the supply of U.S.-made equipment to factories operated in China by Korean semiconductor companies such as Samsung Electronics and SK Hynix.
The Wall Street Journal (WSJ) reported on the 20th (local time). According to the WSJ, Jeffrey Kessler, Under Secretary of Commerce for Industry and Security, said:
This week, he directly conveyed this policy to Samsung Electronics, SK Hynix, and Taiwan's TSMC. Kessler said that the three companies will be required to pay US-made equipment to their semiconductor factories in China.
The move was made public in response to a request from the U.S. to withdraw individual license exemptions that had been in place until the end of 2016. The move was intended to allow South Korean and Taiwanese semiconductor companies to use U.S.-made cutting-edge equipment in China.
This is being interpreted as an attempt to effectively block the export of equipment, since even if the U.S. government does not completely ban the export of equipment, it is likely to control the inflow of sensitive technology through licensing reviews.
The policy is seen as an attempt to prevent the transfer of core U.S. technologies to China amid an intensifying battle for technological hegemony between the U.S. and China during the second term of the Trump administration.
Prior to this, the Biden administration implemented export control measures to restrict U.S. companies' exports of advanced equipment to Chinese semiconductor companies, while also restricting exports to friendly Chinese companies such as Samsung Electronics and SK Hynix.
Samsung Electronics operates a NAND flash production plant and a packaging plant in Xi'an and Suzhou, China, respectively, while SK Hynic operates a NAND flash production plant and a packaging plant in Suzhou, China, respectively.
China has a DRAM factory in Wuxi, a packaging factory in Chongqing, and a NAND factory in Dalian. The Biden administration is trying to curb China's "technology-based nation" while minimizing damage to allied companies.
In order to do so, the Validated End User (VEU) system has been adopted. This system allows comprehensive export control to pre-approved companies without the need for individual licenses.
The VEU system allows South Korean semiconductor companies to operate their factories in China without the need for special procedures, and the WSJ reports that the Trump administration may decide to abolish the VEU system altogether.
The move comes just days after high-level trade talks between the United States and China were recently held in Geneva and London, raising concerns that it could once again spark conflict between the two countries.
A White House official told the WSJ that the move was not intended to escalate the trade conflict between the U.S. and China, but noted that China had introduced a licensing system for exports of rare earths produced in the U.S.
China accounts for more than half of the world's rare earth production and has used the resource as a strategic tool.