TSMC to See "Operational Risk" as U.S. Nixes China Chip Equipment Waiver

Taiwan Semiconductor Manufacturing Co. (TSMC)’s facility in Nanjing faces “operational risk within months” after the U.S. government revoked its authorization to freely ship essential equipment to China, though analysts say the long-term impact will be limited, the South China Morning Post reported.

In the near term, TSMC may redirect equipment originally slated for its Kumamoto, Japan, plant to Nanjing and stockpile spare parts ahead of the December deadline. (Photo: Peellden Wikimedia Commons)

Effective December 31, Washington rescinded TSMC’s fast-track export privilege under the Validated End User (VEU) program, meaning future shipments of U.S.-origin chipmaking gear to its Jiangsu-based plant will require individual licenses.

Without blanket coverage, sourcing equipment may become more difficult, Macquarie Group said in a research note.

“If license approvals are delayed, fabs may run into shortages that could disrupt operations within months,” it warned.

The move is part of the Trump administration’s push to further restrict semiconductor equipment exports to China, following similar actions against Samsung Electronics and SK Hynix.

In the near term, TSMC may redirect equipment originally slated for its Kumamoto, Japan, plant to Nanjing and stockpile spare parts ahead of the December deadline, said Morningstar senior equity analyst Phelix Lee.

Still, the long-term effect is expected to be limited. “TSMC’s Nanjing fab only accounts for 3 percent of capacity,” Lee noted. “Revenue contribution is even lower, as it manufactures lower-priced 16-nm and 28-nm chips.”