[News Terms] ‘VEU’ That Rescued Samsung and Hynix’s Chinese Factories

Recently, the United States designated Korean semiconductor companies such as Samsung Electronics and SK Hynix as ‘VEU (Validated End User),’ which is a type of comprehensive authorization system that allows export and import of designated items only to pre-approved companies. Being included in the VEU means that the U.S. Department of Commerce can approve exports of designated items without separate approval procedures or validity periods, effectively granting an indefinite exemption from U.S. export control regulations.

U.S. export controls are regulations implemented by the Department of Commerce through the Bureau of Industry and Security (BIS). The core of export controls is that prior approval from the U.S. government is required not only for exports of domestic products within the U.S. but also for re-exports to third countries of finished products or components and technologies containing U.S. origin content. It also controls exports and re-exports of most commercial goods, software, and technology, including ‘dual-use’ items that can be used for both commercial and military purposes and specific defense items.

According to these export controls, selling equipment and technology capable of producing logic chips using FinFET technology, DRAM of 18nm or below, and NAND flash with 128 layers or more to Chinese companies requires U.S. government approval. From the 17th (local time), the ban on exports of lower-specification artificial intelligence (AI) semiconductors to China was also added. Additionally, the scope of AI chip export controls was expanded to include companies headquartered in China and other countries of concern, and the licensing system was extended to over 40 security concern countries outside China to prevent circumvention. Semiconductor equipment controls were also expanded to include ▲etching, lithography, deposition, and cleaning equipment and extended the licensing system to 21 countries of concern outside China. Furthermore, 13 Chinese advanced chip-related companies were added to the U.S. Entity List of concern.

Since Samsung Electronics and SK Hynix are designated as VEUs, they are exempt from these export control regulations. However, the import of some items, such as extreme ultraviolet (EUV) lithography equipment necessary for advanced semiconductor mass production, may still be controlled.

Meanwhile, the Ministry of Trade, Industry and Energy judged that the impact of the additional advanced semiconductor export control measures announced by the U.S. Department of Commerce on Korean companies is limited. The ministry evaluated, "Since domestic production of advanced AI chips is minimal and consumer chips can be exempted from controls, the impact of the U.S.’s strengthened export control measures on the domestic industry will be limited."

This content was produced with the assistance of AI translation services.