U.S. Replaces Open-Ended China Fab Access With Annual Licenses for Samsung and SK hynix

At a glance

• The U.S. replaced long-running VEU privileges with annual licenses for shipments of U.S.-controlled chipmaking equipment to foreign-owned fabs in China, effective after Dec. 31, 2025.
• Samsung Electronics and SK hynix received 2026 annual licenses, allowing equipment imports to support existing China operations, according to Reuters.
• U.S. officials indicated licenses are intended to maintain current production, not enable capacity expansion or major technology upgrades at China-based facilities.

The U.S. government has changed how U.S. controlled chipmaking equipment shipments to China are handled for semiconductor facilities operated by foreign companies. In place of longer-running privileges such as the Validated End-User, described as waiver-like treatment for eligible shipments, the system is shifting to licenses that must be renewed each year, putting future tool flows under tighter, recurring review.

According to Reuters, the U.S. has granted annual licenses for 2026 that allow Samsung Electronics and SK hynix to import chipmaking equipment into their manufacturing sites in China. The approvals are intended to support continuity for existing operations, even as broader authorizations are set to end after 2025.

End of Long-Running Authorizations

For several years, certain semiconductor facilities in China operated by multinational companies were able to receive eligible U.S. controlled equipment under a VEU authorization, reducing the need to apply for licenses by shipment. That framework is scheduled to end on December 31, 2025, based on U.S. government rulemaking.

In a final rule published in September 2025, the U.S. Department of Commerce’s Bureau of Industry and Security  removed several entities from the list eligible for VEU treatment in China, including:

• Intel Semiconductor (Dalian) Ltd
• Samsung China Semiconductor Co. Ltd
• SK hynix Semiconductor (China) Ltd

Timeline: How the Policy Shift Unfolded

• Sept. 2, 2025: BIS publishes a final rule removing the above entities from the VEU authorization list for China.
• Dec. 31, 2025: The VEU change takes effect, ending the prior authorization pathway for those entities.
• Dec. 30, 2025: Reuters reports the U.S. granted Samsung and SK hynix annual licenses covering 2026 to import chipmaking equipment into their China facilities.
• Dec. 31, 2025: Reuters reports TSMC also received an annual license for its Nanjing manufacturing facility, and noted Samsung and SK hynix received similar approvals.

Continuity for Existing Fabs, With Clear Limits

Reuters’ reporting indicates the annual license approach is designed to avoid abruptly stopping shipments while still tightening oversight. Importantly, the U.S. Commerce Department plans to approve licenses that allow existing facilities in China to continue operating, but does not intend to grant approvals that would support expansion of production capacity or major technology upgrades at those sites.

The specific terms of Samsung’s and SK hynix’s 2026 licenses were not disclosed publicly; they were described at a high level as approvals to import chipmaking equipment needed to support current operations.

TSMC Nanjing License Offers a Window Into How “Annual Approval” Works

TSMC said its annual license for the Nanjing facility allows U.S. controlled items to be supplied without requiring separate licenses from individual vendors and helps ensure uninterrupted production and deliveries for mature-node semiconductors, including 16nm chips.

While Samsung and SK hynix did not publicly disclose license language, the TSMC statement helps clarify the practical intent to reduce shipment-by-shipment friction within a renewable annual approval structure.

Why This Matters for Semiconductor Supply Chains and Procurement in 2026T

The key change is that access to U.S. controlled equipment supporting China-based fabs is now tied to a yearly renewal cycle rather than an open-ended authorization. That creates new planning checkpoints.

Practical implications to watch:

• Maintenance and uptime risk: tool, spare-part, and service flows can become more sensitive to licensing posture.
• Lead-time and pricing uncertainty: annual renewals introduce policy-timed risk that may affect supplier commitments and buffer strategies.
• Mature-node exposure: even when restrictions focus on “advanced” technologies, mature-node and mainstream output from China-based facilities still feeds a wide range of electronics supply chains.