The United States has decided to revoke Taiwan Semiconductor Manufacturing Co.'s (TSMC) authorization for unrestricted shipments of equipment to its largest chip manufacturing facility in Nanjing, which may lead to disruptions at the plant.
US Decision to Revoke VEU Privileges
TSMC stated that it received notification from the US government that its VEU authorization for the Nanjing plant will be revoked effective December 31, 2025. Without VEU privileges, TSMC’s suppliers must seek individual licenses for each shipment of US-controlled semiconductor tools to Nanjing.
Impact on Semiconductor Manufacturers
The new restrictions may create challenges for TSMC's suppliers, including Applied Materials, ASML, Tokyo Electron, and KLA. Stock prices for these companies have already seen declines in the markets, as they could face complications in their operations with TSMC due to the loss of VEU privileges.
TSMC's Competitiveness Situation
Taiwan's Ministry of Economic Affairs expressed concerns that the revocation of VEU privileges could create uncertainty regarding production levels at the Nanjing plant. However, as the plant accounts for only about 3% of TSMC’s total production capacity, reports suggest little impact on Taiwan’s overall competitiveness in the semiconductor sector.
The revocation of VEU privileges for TSMC in China highlights the ongoing escalation of export restrictions by the US on technology and equipment, which may affect not only TSMC but also its partners.
