US revokes TSMC’s Nanjing export waiver, TSMC unfazed

The US has revoked TSMC’s VEU status for 28nm operations at the company's Nanjing fab.

In a significant policy shift, the US government will revoke TSMC’s “Validated End-User” (VEU) status for its Nanjing fabrication plant, effective December 31, 2025. The move means TSMC must apply for individual export licenses for all U.S. chip-making equipment sent to the facility, disrupting operations focused on 28 nm legacy chips.

From waiver to red tape: A new operational landscape

TSMC’s Nanjing fab previously held a rare VEU (Validated End-User) status, allowing it to receive U.S.-origin tools, parts, and chemicals without delay. With that privilege revoked, TSMC and its suppliers must now apply for individual U.S. export licenses—introducing procedural hurdles that could delay maintenance, upgrades, or expansion.

While not a ban, the move imposes significant bureaucratic constraints on the facility, which manufactures mature-node chips like 28nm. TSMC responded by saying it is “evaluating the situation and taking appropriate measures, including communicating with the U.S. government,” and remains committed to ensuring uninterrupted operations in Nanjing.


Modest Impact on the World's Largest Foundry

In macroeconomic terms, TSMC’s Nanjing plant—launched in 2018—plays a relatively minor role in the company’s global operations. Taiwan’s Ministry of Economic Affairs (MOEA) estimates the site accounts for just 3% of TSMC’s total output, far below Samsung’s 20% and SK Hynix’s 40% from China.

The Central News Agency (CNA Taiwan) highlighted that TSMC earned roughly 11% of its 2024 revenue—around US$9.91 billion—from China, a sharp fall from 20% in 2019, though how much came specifically from Nanjing is unclear. Taiwanese officials and experts agree that even if the plant faces delays or downsizing, the impact on TSMC’s overall competitiveness—and Taiwan’s semiconductor edge—will be minimal.

Why Taiwan Sees Opportunity, Not Crisis

Taiwan’s Ministry of Economic Affairs (MOEA) stressed that the US revocation of VEU status applies not only to TSMC, but also to major South Korean chipmakers like Samsung and SK Hynix—underscoring that the move was not targeted, but part of Washington’s broader tightening of semiconductor export controls.

The MOEA also noted that aside from the Nanjing plant, TSMC’s China operations primarily handle legacy nodes, with limited exposure to sensitive U.S.-regulated technologies. The ministry pledged to continue its communication with both TSMC and US. officials to monitor the situation and offer support where needed.

A senior analyst at Taiwan Ratings, the country’s top credit rating agency, said the risks to TSMC’s operations are limited, given Nanjing’s focus on legacy chips. She added that, since Korean firms have deeper manufacturing exposure in China—particularly in areas like High Bandwidth Memory (HBM)—TSMC could benefit if their production capacity is constrained.

Ultimately, the response from Taiwan’s government and industry reflects a clear-eyed understanding: while the development is serious, it does not pose a significant threat to the island’s global semiconductor leadership.

A Potential Windfall for Chinese Foundries

The revocation may inadvertently benefit Chinese foundries such as SMIC and Hua Hong Semiconductor. With restricted access to TSMC’s Nanjing output, clients could shift orders to local suppliers—potentially boosting their utilization rates and revenue, provided they can meet demand.

At the same time, the US decision aligns with Beijing’s long-standing push for semiconductor self-sufficiency. It could further accelerate investment in China’s domestic toolmakers, though they still lag behind the capabilities required to match TSMC’s commercial-grade technologies.


Global Resonance in a Fragmented Landscape

The revocation highlights the extent of U.S. influence over the global semiconductor industry—demonstrating that even non-American firms operating abroad remain subject to Washington’s export control framework.

It is part of a broader U.S. strategy to curb China’s access to critical chipmaking technologies, especially amid escalating competition over AI and advanced processors. Still, the ultimate impact of such restrictions on China’s semiconductor sector remains uncertain.

Meanwhile, TSMC is deepening its U.S. footprint. With total planned investments in Arizona exceeding US$160 billion, the company is positioning itself as a pillar of Western chip independence. This shift has sparked debate in Taiwan, where some politicians have controversially suggested that the “T” in TSMC now stands for “The U.S.” rather than “Taiwan.”

Resilience Amid Restriction

TSMC’s Nanjing waiver revocation may appear disruptive, but industry analysts suggest the economic fallout is likely to be limited. For TSMC, it introduces logistical hurdles rather than a strategic crisis or a blow to core operations.

For Taiwan, it underscores the island’s enduring strength in cutting-edge chip innovation and high-value manufacturing, reinforcing its central role in global supply chains.

More broadly, the move illustrates how national security policies can reshape commercial landscapes by redirecting capital, rebalancing ecosystems, and potentially empowering local competitors.