US Semiconductor Policy Adjustments: Impact on Korean Firms and Global Supply Chain

Based on the latest information, I provide a comprehensive strategic impact analysis for you:

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The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced on December 30, 2025, adjustments to the regulatory model for the Chinese operations of South Korean semiconductor companies. Key changes include:

• Cancellation of VEU Status
  : The “Verified End-User” (VEU) status of Samsung and SK Hynix’s Chinese factories expired on December 31, 2025 [1][2]
• Adoption of Annual Approval System
  : Starting from 2026, both companies need to submit a one-time annual list of required equipment, which will be valid for the whole year after U.S. approval, replacing the previous model of applying for individual permits for each batch of equipment [1][3]
• 2026 Permit Obtained
  : Both Samsung and SK Hynix have obtained U.S.-approved 2026 equipment import plans [2][3]

While the new policy eases operational procedures, it adds strict strategic restrictions:

• No new advanced process production lines in China or other “countries of concern” for 10 years [1]
• Prohibition of “substantial technical upgrades” to existing production lines [1][4]
• Only “maintenance capital expenditures” are allowed for daily operation and maintenance of existing facilities [4]
• Accept continuous U.S. review of equipment types, technical uses, and production line capabilities [1]

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:

• Avoid Production Interruptions
  : The annual approval system avoids the cumbersome process of up to 1,000 individual permit applications per year as previously estimated, ensuring continuous operation of major production bases such as Xi’an, Wuxi, and Dalian [2][4]
• Supply Chain Continuity
  : Against the backdrop of explosive AI demand and tight memory chip supply, it ensures the stability of the global DRAM and NAND supply chains [4]
• Financial Predictability
  : Reduces compliance uncertainty, facilitating annual capital expenditure planning

:

Dimension	Impact	Specific Manifestation
Technology Iteration	Restricted expansion of advanced processes	Most sensitive equipment such as EUV lithography machines are still on the embargo list, unable to upgrade to the latest process nodes [4]
Capacity Expansion	Only maintain existing scale	Samsung’s Xi’an NAND factory (accounting for 40% of Samsung’s capacity) and SK Hynix’s Wuxi DRAM factory cannot expand substantially [1]
Competitiveness	Diminished relative advantage	Chinese local manufacturers (CXMT, YMTC) are accelerating their catch-up, narrowing the technical gap [7]

• Samsung Xi’an Factory
  : Two fabs with monthly capacity of 250,000 wafers, accounting for 40% of Samsung’s NAND Flash capacity and 10% of global NAND capacity [1]
• SK Hynix Wuxi Factory
  : A large DRAM production base, together with the Dalian NAND factory (acquired from Intel), forms the core of its Chinese operations [1][4]
• Revenue Dependence
  : The Chinese market accounts for about 30% of Samsung and SK Hynix’s revenue, making it a key market for their memory chip business [5]

The 2025 financial data of both companies are strong, reflecting their profit model dependent on Chinese operations:

[0]:

• Market Capitalization: 859.16 trillion KRW, annual stock price increase of 129.87%
• ROE: 8.39%, Net Profit Margin:10.38%
• Q3 2025 Revenue:86.06 trillion KRW, EPS exceeded expectations by29.72%

[0]:

• Market Capitalization:467.44 trillion KRW, annual stock price surge of238.84%
• ROE:41.70%, Net Profit Margin:42.46% (indicating ultra-high profitability of memory business)
• Q32025 Revenue:24.45 trillion KRW, EPS exceeded expectations by 42.34%

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:

• Strategic Contraction of International Giants
  : Samsung, SK Hynix, and Micron will focus more on advanced process investments (HBM, DDR5) in South Korea and U.S. factories, while cutting back on mature process capacity in China and other regions [6]
• Mature Process Capacity Transfer
  : The growth rate of global mature memory capacity will drop below 10%, creating a market window for domestic manufacturers [6]
• Supply Chain Diversification
  : Global customers (including Chinese local cloud vendors) will adopt the “China+1” strategy to diversify supply chain risks

:

Time Node	Global DRAM/NAND Pattern	Role of Chinese Local Manufacturers
2024-2025	Dominated by Samsung, SK Hynix, Micron	CXMT and YMTC accelerate catch-up
2026-2027	International giants focus on high-end	Domestic manufacturers fill the gap in mature processes
Post-2028	Tripartite competition pattern formed	Chinese manufacturers challenge the global top three [6]

:

• Yangtze Memory Technologies Co. (YMTC)
  : Current monthly capacity is close to 130,000 wafers, accounting for 8% of global NAND capacity; plans to increase to15% by the end of2026 [6]
• Changxin Memory Technologies (CXMT)
  : DRAM monthly capacity will reach300,000 wafers by the end of 2025; DDR5 market share is expected to jump to7%; has achieved historical profitability with revenue of32.084 billion yuan from January to September2025 [7][8]

###3. AI-Driven Demand Changes

• HBM Becomes Core Track
  : In the AI era, demand for high-bandwidth memory explodes; Samsung and SK Hynix hold a monopoly in the HBM3E/4 field [6]
• Technology Route Differentiation
  : International giants focus on high-end memory (HBM, DDR5, QLC NAND), while Chinese manufacturers focus on mainstream memory and domestic substitution
• Equipment Demand Rises in Both Volume and Price
  :3D NAND stacking layers break through to500-1000 layers, and the equipment market size grows by1.8 times [7]

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##4. Strategic Impact on China’s Semiconductor Industry Chain

###1. Historical Opportunity for Domestic Substitution

:

The U.S. annual permit policy is essentially a precise control of “

”, which will constrain the expansion of Samsung Xi’an, SK Hynix Wuxi and other production lines in China, creating a strategic opportunity period for domestic manufacturers [6].

:

• CXMT
  : Has successfully crossed the “valley of life and death”; expects to profit3 billion yuan in 2025; becomes the fourth largest global DRAM manufacturer (3.9% market share); completes IPO listing [7]
• YMTC
  :232-layer TLC NAND has been mass-produced with a stable yield rate of95.2%, and is shipped in bulk to global customers; next-generation300-layer technology enters R&D [6]
• Equipment Localization
  : The localization rate of etching and thin film deposition equipment is10-30%, and lithography machines are less than1%, leaving huge room for substitution [7]

###2. $70 Billion National Investment

China announced an injection of

into its domestic semiconductor industry, the largest scale among global governments, directly targeting U.S. export controls [9]:

• Huawei Ecosystem
  : Kunpeng and Ascend series processors benefit, accelerating the localization of servers, cloud computing, and AI chips [9]
• Memory Breakthrough
  : YMTC and CXMT receive accelerated development funds to reduce dependence on foreign DRAM and NAND [9]
• Equipment and Material Autonomy
  : Domestic equipment manufacturers, EDA tool developers, and material suppliers will receive strong support [9]

###3. Industry Chain Shortcomings and Challenges

:

• Equipment Bottleneck
  : DRAM equipment maturity is insufficient; key materials such as EUV photoresist still rely on imports (although SK Hynix is also promoting localization in South Korea) [6][9]
• High-End Application Restrictions
  : Domestic products are still concentrated in the mid-to-low end; AI chip adoption is the main upgrade path [9]
• Technical Gap
  : YMTC (232 layers) vs Samsung (350+ layers), SK Hynix (340+ layers) - still need to catch up [6]

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##5. Future Trends and Strategic Recommendations

###1. Persistent Uncertainty in Regulatory Environment

• Annual Approval Risk
  : Conditions may be adjusted or rejected each renewal, depending on U.S.-China relations and national security assessments [4]
• Trump 2.0 Policy Variable
  : The policy adjustments promoted after Trump took office again in2025 reflect the “America First” trade negotiation strategy, which may be further tightened in the future [1]

###2. Strategic Adjustments of South Korean Enterprises

:

• Capital Expenditure Rebalancing
  : Shift more investment to South Korea (e.g., Pyeongtaek) and U.S. new projects, reducing dependence on Chinese factories [1]
• Technology Route Differentiation
  : Advanced processes (HBM, DDR5) in South Korea/U.S., mature processes maintained in China
• Supply Chain Resilience
  : Establish a more flexible global capacity layout to cope with geopolitical risks

###3. Strategic Window for Chinese Enterprises

:

• Seize Mature Process Market
  : Use the2026-2027 window period to accelerate capacity expansion and customer acquisition, striving to enter the global top three after2027 [6]
• Yield Improvement Campaign
  : Target to increase yield to over80%, achieving the leap from “usable” to “mainstream” [6]
• Supply Chain Autonomy
  : Cooperate with the $70 billion national investment to accelerate domestic substitution of equipment, materials, and EDA tools [7][9]

###4. Impact on Global Customers

• Inventory Strategy Adjustment
  : End manufacturers like Lenovo may hoard memory chips to cope with supply uncertainty [10]
• Supply Chain Diversification
  : Chinese cloud vendors (Huawei, Alibaba, ByteDance) strengthen cooperation with domestic manufacturers to reduce dependence on Samsung and SK Hynix [10]

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##6. Core Conclusions

: The U.S. shifts from “unlimited exemption” to “precise control”, which not only ensures short-term stability of the global supply chain (avoiding impacts on memory prices and AI industry chain) but also curbs the long-term space for China’s semiconductor industry upgrade by restricting advanced process expansion.

: Samsung and SK Hynix get short-term relief but fall into the strategic dilemma of “maintaining Chinese capacity but unable to upgrade technology”, needing to balance between maintaining market share and complying with U.S. restrictions.

:2026-2027 is a historical window for domestic memory manufacturers; with the $70 billion national investment and technical breakthroughs of CXMT/YMTC, they are expected to leap from “substitution” to “competition” in the mature process market.

: The semiconductor supply chain enters the era of “tripartite competition”—the U.S. leads advanced processes, South Korea focuses on high-end memory, China breaks through mature processes, and geopolitical factors will dominate industrial layout for a long time.

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[1] Tencent News - U.S. decides to partially ease equipment export restrictions on Samsung and SK Hynix’s Chinese factories (https://news.qq.com/rain/a/20251230A06ARC00)

[2] Yonhap News - U.S. eases chip equipment export restriction for Samsung, SK hynix plants in China (https://en.yna.co.kr/view/AEN20251230007000320)

[3] Tom’s Hardware - US grants Samsung and SK hynix 2026 licenses for chipmaking tool shipments to China (https://www.tomshardware.com/tech-industry/us-grants-samsung-and-sk-hynix-2026-licenses-for-chipmaking-tool-shipments-to-china)

[4] EETOP - Last-minute approval! U.S. grants Samsung/SK Hynix chip equipment permits to China! Future is fraught with crises (https://www.eetop.cn/semi/6965000.html)

[5] Sina Finance - China’s semiconductor industry is accelerating the pace of domestic substitution (https://finance.sina.com.cn/tech/roll/2025-12-25/doc-inhcztfz3107589.shtml)

[6] EET China -2025 Memory Chip Market Summary and Outlook (https://www.eet-china.com/mp/a463770.html)

[7]36Kr - As the market rebounds, this sector quietly explodes (https://m.36kr.com/p/3593636660429062)

[8] NetEase - CXMT IPO Analysis: Expected Profit of3 Billion Yuan in2025, Domestic Memory Crosses “Valley of Life and Death” (https://www.163.com/dy/article/KI4LH1R30519B8U3.html)

[9] Financial Content - China Unleashes $70 Billion Semiconductor Gambit (https://markets.financialcontent.com/wral/article/tokenring-2025-12-12-china-unleashes-70-billion-semiconductor-gambit-igniting-new-front-in-global-tech-war)

[10] Intuition Labs - RAM Shortage2025: How AI Demand is Raising DRAM Prices (https://intuitionlabs.ai/articles/ram-shortage-2025-ai-demand)

[11] Digitimes - Top tech topics in2025: strategic realignment for global semiconductor industry (https://www.digitimes.com/news/a20251229VL211/semiconductor-industry-ai-demand-market-2025.html)

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