TSMC has become the latest chipmaker to lose its exemption to use US semiconductor equipment in China, following similar moves against South Korea's Samsung Electronics, SK Hynix, and Intel. Industry analysts suggest the operational impact may be limited in the short term, but will bring fresh uncertainty for the long term.
In a statement, TSMC confirmed it had "received notification from the US government that the VEU authorization for our Nanjing fab will be revoked effective December 31, 2025." The world's largest contract chipmaker said it is evaluating the situation and communicating with the US government while pledging to "ensure uninterrupted operations at the TSMC Nanjing facility."
The decision follows the US Bureau of Industry and Security's announcement last week that exemptions for Samsung and SK Hynix's Chinese fabs, as well as Intel Semiconductor's Dalian operations, will also be withdrawn. The revocations mean that all four companies will now need to obtain individual licenses to ship certain advanced US equipment to their plants in China.
Further tightening looms
The move is part of Washington's broader effort to restrict Beijing's access to advanced manufacturing tools and to slow China's technological progress. The South China Morning Post reported that the US may tighten policies further by pushing allies to block technology exports or to ban the adoption of US-origin technologies in China.
China, in turn, faces significant challenges in developing self-sufficiency in chipmaking tools. Wccftech, citing Goldman Sachs, estimates that Chinese lithography companies lag their US counterparts by at least 20 years. Dutch firm ASML currently produces the world's most advanced lithography machines, but because they rely on American components, Washington has the authority to restrict their sale to Chinese buyers.
According to The South China Morning Post, market watchers believe Beijing was prepared for the move, noting that Chinese companies have likely drafted contingency plans. However, the long-term implications could accelerate China's push to develop its own semiconductor ecosystem, even if catching up with Western equipment makers remains a distant goal.
Analysts' perspectives
In the short term, industry analysts suggest the operational impact may be limited. Reuters reported that both Samsung and SK Hynix have concentrated their new capacity expansions in South Korea, reducing reliance on their Chinese fabs. The revocations, however, could open opportunities for competitors such as Micron Technology, which has less exposure to China.
Longer term, the policy shift introduces fresh regulatory uncertainty for global chipmakers, potentially disrupting supply chains and raising operational costs. Companies may need to reassess their manufacturing strategies in China, with some expected to deepen partnerships with Chinese equipment suppliers to mitigate risks.
Bloomberg Intelligence said in a note that the US tightening on chipmaking-equipment exports to TSMC's Nanjing fab is more significant as a policy signal than an operational disruption. With the Nanjing fab's expansion completed in 2024 and minimal strategic incentive for further capacity increases due to oversupply at mature 22-28nm nodes, the revenue impact to TSMC is likely to remain immaterial, staying below 2.5%, through 2027.
Article edited by Jack Wu
