South Korea's top trade negotiator said on Sunday he will raise concerns about possible U.S. restrictions on Chinese chipmakers when he holds technical discussions with U.S. officials in Washington this week for the third round of tariff talks.

Asked to comment on concerns that the United States may adopt policies that make it difficult for foreign chipmakers to operate in China, South Korean Trade Minister Yeo Han-koo told reporters before leaving for Washington: "I will convey these concerns to industry insiders and exercise the utmost caution."

Yeo also said Seoul may not meet the July deadline, meaning negotiations could continue beyond July 8 amid political and economic uncertainty in the United States.

South Korea currently imposes a 10% across-the-board tariff on imports from China and a 90-day suspension of 25% tariffs on specific countries. South Korea agreed to reach a trade deal with reduced tariffs by July 8 during its first round of trade talks with the United States in late April.

Yeo was appointed to the post this month by South Korean President Lee Jae-myung, who won an early election on June 3 and said during his campaign that there was no need to rush a trade deal with the United States.

Yeo added on Sunday that he would contact officials from the White House and the U.S. Congress to discuss various trade issues, including Washington's request that South Korea ease restrictions on U.S. beef imports.

US may target Samsung, Hynix and TSMC's operations in China

The U.S. Commerce Department is considering revoking waivers granted to global chipmakers Samsung, SK Hynix and TSMC in recent years, making it harder for their factories in China to access U.S. goods and technology, according to sources.

The likelihood of the U.S. revoking the authorizations is unclear. But if the U.S. revokes the authorizations, it will become more difficult for foreign chipmakers to do business in China because the semiconductors they produce in China are widely used in a wide range of industries.

A White House official said the U.S. is "just preparing for the collapse of the deal." But the official said he believes the trade deal will go forward and rare earths will be imported from China as agreed.

"We have no intention of deploying this strategy at this time," the official said. "It's another tool we want in case this deal fails or anything else creates an obstacle to the bilateral relationship."

Shares of U.S. chip equipment makers that supply Chinese factories fell after the Wall Street Journal first reported the news early Friday. KLA Corp fell 2.4%, Lam Research fell 1.9% and Applied Materials fell 2%. Micron Technology, Samsung and SK Hynix's main rival in memory chips, rose 1.5%.

A TSMC spokesperson declined to comment. Samsung and Hynix have not yet responded to requests for comment. Lam Research, KLA and Applied Materials did not immediately respond.

In October 2022, the United States issued authorizations to foreign manufacturers such as Samsung and Hynix to receive goods after imposing sweeping restrictions on China's exports of U.S. chipmaking equipment.

In 2023 and 2024, the companies received so-called "verified end-user" status to continue trading.

Companies with VEU status are able to receive designated goods from U.S. companies without requiring suppliers to obtain multiple export licenses to ship. As stated on the U.S. Department of Commerce website, VEU status enables entities to receive U.S.-controlled products and technologies "easier, faster and more reliably."

A person familiar with the matter said VEU authorizations are conditional, including prohibitions on certain equipment and reporting requirements.

Asked about the possible revocation, a Commerce Department spokesman said in a statement: "Chip manufacturers can still operate in China. The new chip enforcement mechanism is the same licensing requirements that apply to other semiconductor companies exporting to China and ensures that the United States enjoys an equal and reciprocal process."

Industry insiders said that if it becomes more difficult for U.S. semiconductor equipment companies to ship to foreign multinationals, it will only help China's domestic competitors.

"It's a gift," said one person.

Source: Content compiled from Reuters

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