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U.S. Considers Annual Chip Supply Approvals for Samsung and SK Hynix China Plants

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The United States is weighing a proposal to require Samsung Electronics and SK Hynix to seek annual approvals for shipping chipmaking equipment and supplies to their China-based factories, Bloomberg reported Monday, citing people familiar with the matter.

The plan, presented by the U.S. Commerce Department to Korean officials last week, would replace the current validated end user (VEU) designations that granted the chipmakers indefinite export authorizations. Those designations are set to expire at the end of 2025.

Under the draft proposal, Samsung and SK Hynix would need yearly approval for specific quantities of restricted tools and materials, adding regulatory steps but ensuring their Chinese fabs can keep operating. The companies are among the largest foreign chipmakers with plants in China, supplying memory chips vital to global electronics.

Reactions in Seoul were mixed—officials expressed relief that a framework for continued operations remains, but concern over the added bureaucratic burden and potential supply chain uncertainties.

The move comes against the backdrop of intensifying U.S.-China semiconductor tensions. Since 2022, Washington has imposed sweeping export controls to curb Beijing’s chip and AI capabilities. The Biden administration had granted waivers to Samsung, SK Hynix, and TSMC to soften the blow to allied companies, but the Trump administration has pushed for tighter oversight.

The situation is further complicated by political strain: Washington revoked prior waivers days after former South Korean President Lee Jae Myung—who advocated a more balanced U.S.-China stance—signed a defense and investment deal with Trump. Recent U.S. immigration raids on Korean firms’ American subsidiaries have also fueled friction.

Applied Materials Misses Q2 Revenue Target as Export Controls Weigh on Sales

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Applied Materials missed Wall Street expectations for second-quarter revenue, reporting $7.10 billion versus the estimated $7.13 billion, as U.S. export restrictions on semiconductor equipment to China and slower investment in certain markets impacted performance.

Shares of the Santa Clara-based chipmaking equipment giant fell more than 5% in extended trading following the earnings release.

Segment Performance and Key Challenges:

  • Revenue from Semiconductor Systems, the company’s largest business segment, came in at $5.26 billion, below analysts’ forecast of $5.32 billion.

  • Sales in the ICAPS market — covering IoT, communication, automotive, power, and sensors — slowed, although this was partially offset by strong demand for advanced-node chipmaking equipment.

Impact of Export Controls:

  • The U.S. government’s export restrictions, announced in December, now prevent shipment of advanced chipmaking tools to China — Applied Materials’ largest overseas market.

  • As a result, revenue from China fell to 25% of total sales, down sharply from 43% a year earlier.

  • Analyst Kinngai Chan of Summit Insights Group said the export controls are clearly impacting results, but added:

    “We think the company can overcome this headwind over time as spending on advanced process nodes picks up in the second half of 2025 and into 2026.”

Profit and Outlook:

  • Despite the revenue miss, adjusted Q2 earnings per share were $2.39, beating the $2.31 consensus.

  • Applied Materials provided Q3 revenue guidance of $7.20 billion ± $500 million, roughly in line with analyst estimates of $7.19 billion.

  • CFO Brice Hill downplayed concerns, stating:

    “Despite the dynamic economic and trade environment, we have not seen significant changes to customer demand.”

Summary:

While strong demand for advanced chips offers a long-term buffer, current headwinds from trade restrictions and market softness in core segments are affecting short-term performance. Investors remain cautious amid geopolitical friction and shifting global chip manufacturing strategies.