U.S. rescinds exemption for China-bound chip exports from TSMC
The United States has taken a significant step in regulating the semiconductor industry by revoking Taiwan Semiconductor Manufacturing Co (TSMC)'s authorization to freely ship essential gear to its Nanjing site. This move mirrors steps the US took earlier to revoke Validated End User (VEU) designations for China facilities owned by Samsung Electronics Co and SK Hynix Inc.
The TSMC Nanjing campus, which houses technology as advanced as 16-nanometer, first became commercially available more than a decade ago, contributes a small fraction of TSMC's total revenue. The revocation of VEU status for TSMC, Samsung, and SK Hynix will require suppliers to proactively seek US licenses for shipments of goods covered by US export controls, including advanced manufacturing gear, spare parts, and chemicals consumed in the production process.
The decision to revoke TSMC's VEU status for its Nanjing site was made by the U.S. government, specifically the U.S. Department of Commerce, due to escalating geopolitical tensions and tighter export controls related to China. The waivers are set to expire in about four months, on December 31, 2025.
TSMC has received a notification from the US Government about the revocation of its VEU authorization for TSMC Nanjing. The company is evaluating the situation and taking appropriate measures, including communicating with the US government. TSMC's VEU status was never published in the federal register, unlike the other affected companies.
The BIS action will result in an additional 1,000 license requests annually for Samsung and SK Hyniz's China facilities. The move highlights the extent of Washington's influence and control over the supply chain for electronic components, even when the plants in question are operated by non-American companies in a foreign country.
The manufacturing footprint of TSMC in China is relatively small compared to Samsung and SK Hynix. The US officials have said they intend to issue licenses needed to keep those facilities operational, but the shift from blanket permission to individual approvals introduces uncertainty about wait times to secure those permits.
The situation underscores the complexities of global trade and the increasing scrutiny of foreign operations by American authorities. As the semiconductor industry continues to evolve, it remains to be seen how these changes will impact the industry's growth and competitiveness.
