Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chip maker, has received an indefinite exemption from US trade sanctions on mainland China. This exemption enables TSMC to continue acquiring advanced chip equipment for its operations in China, marking a pivotal moment amid ongoing global supply chain challenges.
The United States Department of Commerce’s Bureau of Industry and Security (BIS) has advised TSMC to apply for the “validated end-user” (VEU) program. Under this program, the chipmaker can receive exports without separate approvals, easing restrictions on foreign chipmakers operating in China. TSMC expressed confidence in obtaining a permanent authorization through the VEU process, streamlining its operations.
This move follows the Biden administration’s October 2022 export controls, which aimed to limit China’s access to certain semiconductor chips made worldwide with US tools. Last year, TSMC secured a one-year authorization, covering its factory in Nanjing, China, producing 28-nanometer chips. The recent waiver extension alleviates uncertainties surrounding TSMC’s operations, enabling the company to plan its manufacturing processes effectively.
South Korea’s Samsung Electronics and SK Hynix have also received similar indefinite waivers, allowing them to supply US chip equipment to their China factories without separate approvals. These developments reflect a nuanced approach by the United States, balancing national security concerns with the complex interdependence of the global technology sector.
TSMC’s operations in mainland China, including its facilities in Shanghai and Nanjing, will continue without disruption. While specific details about the waiver’s duration were not disclosed, the industry anticipates a year-long extension, aligning with previous patterns.
This decision comes in the wake of the Biden administration’s efforts to address the challenges posed by emerging technologies.
In a bid to bolster domestic semiconductor manufacturing, the administration removed stringent curbs on expansion in China by companies receiving federal funds to build plants in the US. Both TSMC and Samsung are poised to benefit from US subsidies for their new facilities, enhancing their competitive edge and strengthening the US technology ecosystem.
TSMC’s Taipei-listed shares closed higher following the announcement, indicating positive market sentiment. As the global technology landscape continues to evolve, these developments underscore the delicate balance between international cooperation and safeguarding national interests in the realm of advanced semiconductor technologies.
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