In a significant development, Taiwan’s leading semiconductor manufacturer, TSMC (Taiwan Semiconductor Manufacturing Company), has announced its anticipation of receiving indefinite permission from the United States to supply its China-based plant with essential U.S. chipmaking tools. This news marks a notable easing of Washington’s restrictions on foreign chipmakers operating in China, signaling a potential shift in international trade dynamics in the technology sector.
TSMC disclosed that the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has advised the company to apply for the “validated end-user” (VEU) program. This program would allow TSMC to receive exports without requiring separate approvals, streamlining the supply chain process for the semiconductor giant. In a statement to Reuters, TSMC expressed confidence in receiving a permanent authorization through the VEU process. It is worth noting that TSMC had not previously needed to apply for VEU status, indicating a shift in regulatory requirements.
This development comes after the Biden administration’s imposition of comprehensive export controls in October last year, aiming to restrict China’s access to specific semiconductor chips made globally with U.S. tools. These measures were part of a broader strategy to curb Beijing’s technological advancements and military capabilities. The administration’s move had wide-ranging implications for chipmakers worldwide, prompting a reassessment of their operations and supply chains.
Interestingly, South Korea’s government also recently announced that major electronics companies, Samsung Electronics and SK Hynix, will be allowed to supply U.S. chip equipment to their China-based factories indefinitely without the need for separate U.S. approvals. This parallel decision indicates a broader trend toward a more permissive approach to technology exports to China, albeit with certain regulatory frameworks in place.
TSMC, often hailed as the world’s largest contract chipmaker and a key supplier to tech giant Apple Inc., had previously secured a one-year authorization from the United States, covering its Nanjing-based factory producing 28-nanometer chips. The company clarified that it has also received U.S. authorization to continue its operations in Nanjing while the application for VEU status is in progress, ensuring business continuity and stability in its manufacturing processes.
However, it’s worth noting that while some restrictions are being eased, the United States remains vigilant in efforts to limit China’s access to advanced technologies, particularly in the realm of artificial intelligence (AI). Reports have emerged suggesting that the Biden administration is actively considering closing loopholes that currently enable Chinese companies to access American AI chips through overseas units. This reflects the ongoing diplomatic and technological challenges between the two global powers, underscoring the complex landscape of international technology trade.
In response to these developments, TSMC’s Taipei-listed shares experienced a positive uptick, closing up by 0.6% on Friday. This outperformance against the broader market, which saw a 0.3% drop, highlights the market’s positive reception of TSMC’s prospects amid evolving international trade policies and regulations. As the technology industry continues to navigate these changes, stakeholders will keenly observe further developments in U.S.-China relations and their impact on the global semiconductor market.