The United States’ stance on chipmaking is hurting major South Korean chip manufacturers. Shares in South Korea’s top chipmakers reportedly fell on Monday after Washington revoked waivers that had allowed them to send U.S. manufacturing equipment to their facilities in China without a licence.
The United States, under President Donald Trump’s administration, has intensified its efforts to revitalize the domestic semiconductor industry through aggressive trade policies. A landmark move was the imposition of a 100% tariff on imported semiconductors, designed to curb reliance on foreign suppliers, particularly from China and other Asian manufacturing hubs. This tariff targets chips that are crucial for technology sectors including smartphones, computers, and automotive electronics.
To soften the impact on global supply chains and incentivize domestic production, the administration exempted companies that have established or committed to building semiconductor manufacturing facilities within the U.S. Major industry players like TSMC, Samsung, and SK Hynix have thus been encouraged to expand their U.S. operations.
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Former President Joe Biden had allowed the world’s two largest producers of memory chips to send U.S. chipmaking tools to their Chinese plants without having to apply for a licence for each transfer, amid concerns that hobbling the South Korean companies’ operations would benefit Chinese rivals, but the commerce department on Friday said it had closed the “Biden-era loophole” and that companies would now need to obtain licences to export U.S. equipment to chip factories, known as “fabs,” in China.
Alongside tariffs, legislative action came in the form of the Trade Review Act of 2025, which requires the executive branch to obtain congressional approval for tariffs lasting more than 60 days. This bipartisan legislation aims to restore a balance of power between Congress and the president in trade policymaking. The combined effect of these policies has caused significant shifts in the global semiconductor landscape.
Companies worldwide are recalibrating supply chains to avoid punitive tariffs, spurring investment in U.S.-based chip manufacturing. However, these measures have also led to market uncertainties and increased costs in electronics. The Supreme Court is poised to hear related cases on tariff authority, signaling ongoing legal and political battles over the future of U.S. trade and industrial strategy.
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SK Hynix shares reportedly declined almost 5%, while Samsung Electronics shares shed more than 2% after the U.S. government said it was removing the companies’ “validated end user” status.
This move disrupts their ability to maintain and upgrade fabs in China, forcing these companies to reassess their operational strategies amid growing regulatory hurdles. Although the immediate impact on production may be limited, the increased compliance requirements and geopolitical pressures are likely to drive South Korean firms to reconsider their investments in China, potentially accelerating efforts to diversify manufacturing closer to or within the U.S.
CW Chung, joint head of Asia-Pacific equity research at Nomura, said Samsung and SK Hynix “had continued to upgrade their Chinese facilities, hoping that the U.S. waiver would be kept in place.” While the “short-term impact on their production in China is limited,” the South Korean chipmakers “will have to think hard now whether to continue their operations there,” Chung said.