Asia-Pacific NewsweekSouth Korea’s top trade negotiator flew to the U.S. on Sunday to discuss potential U.S. restrictions on chipmakers when meeting U.S. officials in Washington this week.
Trade Minister Yeo Han-koo spoke with reporters on Sunday before leaving the third round of negotiations on tariffs. “I will address concerns among people in the industry and do my best,” Yeo said. Foreign chip manufacturers Operating in China.
People familiar with the matter said late last week that the U.S. Department of Commerce is considering revoking the authorization granted to global chip manufacturers Samsung, SK Hynix and TSMC in recent years, making it harder for their factories in China to obtain U.S. goods and technology.
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The U.S. could revoke authorization for chipmakers to work in China
The chances of the U.S. withdrawing its authorization are unclear. However, with such a move, it will be difficult for foreign chip manufacturers to operate in China to produce semiconductors used in various industries there.
A White House official said the United States is “laying the foundation” if a truce between the two countries collapses. However, the official said the trade agreement will continue to move forward and the rare earth will flow out of China.
“There is no intention to deploy this strategy at the moment,” the official said. “This is another tool we want in the toolbox in case the protocol passes or any other catalyst throws a wrench in a bilateral relationship.”
Chip manufacturers share decline
Stocks of U.S. chip equipment manufacturers that provide plants in China fell Wall Street Journal First, the news was reported earlier on Friday. KLA Corp fell 2.4%, LAM studies fell 1.9%, and applied materials fell 2%. Shares of Samsung and SK Hynix, the main competitor of the memory chip space, rose 1.5%.
A TSMC spokesperson declined to comment. Samsung and Hynix did not immediately respond to requests for comment. LAM studies, KLA and applied materials also did not respond immediately.
In October 2022, it provides foreign manufacturers with huge restrictions on U.S. chip manufacturing equipment Samsung and Hynix letters authorize them to receive merchandise.
In 2023 and 2024, these companies obtained so-called Verified End User (VEU) status to continue trading.
Companies with VEU status are able to receive designated goods from U.S. companies without the need for suppliers to obtain multiple export licenses to ship them. As the Ministry of Commerce website states, VEU status enables entities to receive products and technologies that we control “easier, faster, and more reliably.”
People familiar with the matter say VEU authorization comes with conditions, including prohibition of certain equipment and reporting requirements.
“Chip manufacturers are still able to operate in China,” a Commerce Department spokesperson said in a statement. “The new law enforcement mechanism on chips reflects the requirements for other semiconductor companies exported to China and ensuring that the United States has an equal and mutual process.”
Industry sources say it would only help domestic Chinese competitors if it becomes more difficult for U.S. semiconductor equipment companies to ship to foreign multinationals. “It’s a gift,” said one person.
Seoul may miss trading deadline on July 8
Yeo will be in Washington until June 27, and he will hold talks with U.S. Trade Representative Jamieson Greer as part of a third round of bilateral talks.
He warned that Seoul may not comply with the July deadline, suggesting that talks may continue amid U.S. political and economic uncertainty.
“Since the South Korean U.S. summit has not yet been held under the new administration, the negotiations are likely to focus on areas that the Ministry of Trade can manage – excluding major issues such as defense cost sharing and exchange rates,” said Heo Yoon, a professor of economics at Sogang University.
“In view of these circumstances, a comprehensive agreement on the key negotiation framework and agenda is expected to be challenging.”
Currently, South Korea currently pays 10% blanket tariffs, and in the first round of trade negotiations in late April, a 25% suspension period was suspended during the 90-day moratorium to formulate a trade agreement to formulate a trade agreement by July 8.
Yeo was appointed this month by new President Lee Jae Myung, who won the SNAP election on June 3 and said during the campaign that there is no need to rush to reach a trade deal with the United States.
On Sunday, Yeo added that he would approach officials in the White House and U.S. Congress to discuss various trade issues, including Washington’s request for South Korea to abandon rules on importing U.S. beef.
- Jim Pollard’s additional editor Reuters
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