US prepares action targeting allies’ chip plants in China, WSJ reports

(Reuters) -A U.S. official has informed leading global semiconductor companies of plans to cancel waivers allowing them to use American technology in China, the Wall Street Journal reported on Friday, citing people familiar with the matter.

Jeffrey Kessler, under secretary of commerce for industry and security at the Commerce Department, told Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing this week that he wanted to cancel those waivers, WSJ reported.

Shares of U.S. chip equipment makers that supply chipmaking plants in China fell on the news. KLA Corp dropped 3.8%, Lam Research fell 4.7% and Applied Materials sank 3.8%.

A Commerce Department spokesperson said in a statement, “Chipmakers will still be able to operate in 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 move would make it harder for foreign chipmakers to operate in China where they produce semiconductors used in a wide range of industries.

(Reporting by Bipasha Dey in Bengaluru; Editing by Mark Porter, Franklin Paul and Alistair Bell)