US May Revoke Chip Equipment Waivers for Asian Firms in China

The U.S. Commerce Department is reportedly considering revoking waivers that allow American companies to sell semiconductor manufacturing equipment to facilities operated by TSMC, Samsung, and SK hynix in China. Under Secretary of Commerce for Industry and Security Jeffrey Kessler discussed these potential restrictions during a recent House subcommittee hearing. The current waivers permit these Asian chipmakers to import American manufacturing equipment for their Chinese operations without requiring specific licenses.

The potential policy change would affect the sale of chip manufacturing equipment such as etching and deposition machines to these companies' facilities in China. These three firms currently operate memory and mature node manufacturing facilities in China and have previously enjoyed blanket waivers from U.S. export restrictions. According to reports from the Wall Street Journal and Reuters, Kessler has expressed interest in canceling these waivers, though no final decision has been made.

The consideration of waiver cancellations appears connected to ongoing trade negotiations between the United States and China, particularly regarding rare earth minerals. The reports suggest the U.S. may be using the potential restrictions as leverage in discussions about China's licensing system for rare earth metals. China has reportedly placed six-month expiration dates on its rare earth mineral export licenses, while the Trump administration has requested that China supply necessary rare earths upfront as part of trade agreements.

Some U.S. officials have expressed concern that excessive restrictions on equipment sales could inadvertently stimulate China's domestic semiconductor equipment industry. Chinese manufacturers such as ACM Research, Advanced Micro-Fabrication Equipment Inc., and NAURA Group have already seen significant revenue growth in 2024. A White House official indicated to Reuters that the government does not currently intend to revoke the waivers, acknowledging that such actions could complicate both U.S.-China trade negotiations and relations with allies in South Korea and Taiwan.

Kessler stated at the House subcommittee hearing that partnerships between the U.S. and allied nations were incomplete in "important ways," which he suggested was enabling U.S. adversaries to advance their technology capabilities. The semiconductor equipment in question, while not as advanced as ASML's EUV lithography machines, remains crucial for manufacturing various types of chips, including those used in mature technology nodes and memory production.