Trump may revoke chipmakers’ waivers to use U.S. equipment in China

Chip stocks sank on Friday after the Wall Street Journal reported that Trump is looking at new restrictions targeting China’s semiconductor access. The drop hit hard across the board.

Taiwan Semiconductor Manufacturing Co. (TSMC) lost 2.5% in its US-listed shares, while the Philadelphia Semiconductor Index slid by 2%. Applied Materials fell 4%. Dutch equipment maker ASML Holding NV also took a 1.9% hit.

The new curb warning came from Jeffrey Kessler, the Commerce Department’s undersecretary for industry and security. He told TSMC, Samsung Electronics, and SK Hynix that the waivers they currently rely on might be pulled. These waivers let them use US semiconductor manufacturing tools inside China. If they lose them, it would disrupt key parts of the global chip supply chain.

US justifies restrictions with reciprocal licensing policy

The Commerce Department tried to calm things down, saying in a statement to Bloomberg that the companies are not being shut out of China.

“The new enforcement mechanisms on chips mirror licensing requirements that apply to other semiconductor companies that export to China and ensure the United States has an equal and reciprocal process,” the official reportedly said. That same quote was shared with the Wall Street Journal, too.

The White House also defended the move, saying it’s not meant to increase trade tensions. Instead, it’s about aligning licensing rules with how China treats its own rare-earth material exports. But the timing complicates everything. US and Chinese officials are still working on finalizing the trade agreement they discussed in London, and this could easily be seen as the US going back on that deal, according to the Journal.

This new enforcement approach could anger Beijing and strain ties with Seoul and Taipei, whose companies would be the most impacted. These allies have spent billions building US plants and have supported Washington in its tech strategy against China. Removing the waivers would directly target their chip operations in China, including Samsung’s memory chip plant in Xi’an.

The Xi’an factory is part of a larger network that includes production of memory, logic, and other chips. These aren’t cutting-edge plants, but their products are used worldwide in everything from smartphones to vehicles. If the waivers disappear, it doesn’t mean factories will shut down tomorrow, but over time, they’ll find it harder to run without access to US gear and updates.

Companies scramble for backup plans as US debates waiver removal

Industry executives say they’ll likely need to apply for special licenses to keep their Chinese factories going. Others are already looking at suppliers from Japan and Europe to find equipment not bound by US restrictions. But the situation remains unstable. The waiver removal isn’t confirmed yet, as the Journal’s report claims Kessler’s office at the Bureau of Industry and Security hasn’t gotten full approval from the rest of the US government.

There’s pushback inside the administration. Some officials, especially in the Defense Department, believe that scrapping the waivers could actually help China, worried that if American firms leave, Chinese companies will just take over the plants, according to the Journal. But Kessler and the national security faction argue that more aggressive controls are needed to block China’s growth in key technologies.

That split has grown louder in recent months. The Biden-era chip bans were already biting. Sales of high-performance chips to China from Nvidia and Advanced Micro Devices (AMD) were stopped. That decision alone cost billions in lost revenue. Commerce also floated a broader ban on chip equipment sales to China, though a White House official said that idea is no longer being considered.

At the same time, Samsung, TSMC, and SK Hynix have all alerted their own governments. They’re asking authorities in South Korea and Taiwan to step in and help block the waiver changes. The stakes are high. Both countries are working on wider trade deals with Washington. The companies fear this dispute could derail those talks completely.

Their argument is simple. They need their Chinese factories to compete. Samsung’s current waiver lets its Xi’an plant make advanced chips that directly challenge China’s Yangtze Memory Technologies. Losing that ability hands the advantage to China, the very outcome the US says it’s trying to avoid.

South Korea and Taiwan have already cooperated with the US on restricting tech transfers to China. They’ve also made huge investments in American factories with government support. The companies involved—Samsung, TSMC, and SK Hynix—have each poured billions into US facilities.

The waiver fight now threatens to undermine those efforts, damage trade talks, and unsettle the already fragile global chip industry.

Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More