Reported by Bloomberg, this development could have significant impacts on global supply chains and the semiconductor industry, especially as it relates to US-China tech tensions.

The US is planning to replace the current perpetual VEU authorizations for Samsung and SK Hynix's Chinese factories with an annual export license system, aiming to tighten control over semiconductor exports to China.

This new proposal emphasizes increased transparency and oversight, with companies required to report detailed import plans each year, potentially revealing business information and reducing operational flexibility.

The move follows the revocation of previous exemptions, such as the VEU list, which allowed these companies to receive US equipment without additional approval, raising concerns about operational disruptions.

While the measures are seen as a compromise that avoids a complete ban, industry officials in Korea view the restrictions as both a relief and a burden, given the increased bureaucratic hurdles.

Under this scheme, companies must declare quantities of export content from Chinese plants and seek US approval for all restricted equipment, parts, and materials used throughout the year.

This change reflects ongoing US efforts to tighten semiconductor export controls to China, balancing economic interests of South Korean chipmakers with broader geopolitical tensions.

South Korea is caught between its alliance with the US and its economic ties with China, amid tensions that have led to market instability and US raids on Korean firms' facilities in Georgia.

Reactions in Seoul are mixed; some industry officials see the annual license system as offering more predictability, while others are frustrated by increased administrative burdens and potential delays.

The new US proposal requires South Korean companies to seek yearly approval for shipments of restricted equipment, with specific quantities, which complicates operations but aims to prevent expansion or upgrades in Chinese factories.

The US Department of Commerce's proposed 'site license' system would permit companies to export a set amount of restricted gear annually, requiring approvals each year and prohibiting expansion or renovation of facilities.

Despite the tighter controls, US officials emphasize they do not intend to disrupt chip manufacturing but aim to prevent exports that could enable factory expansion or upgrades in China.