US Revokes TSMC’s China Chip Waiver—Supply Chains Brace for Impact
The Biden administration just pulled TSMC's golden ticket to freely ship advanced semiconductors to China—and the tech world is feeling the shockwaves.
Geopolitics meets supply chain chaos
Washington's move effectively slashes one of the last major legal channels for cutting-edge chips to reach Chinese manufacturers. No more exceptions, no more workarounds—just a hard stop on one of the industry's most delicate trade relationships.
TSMC now faces a brutal squeeze: balancing its deep-rooted ties to US tech policy against the colossal gravitational pull of the Chinese market. Analysts whisper about contingency plans, shadow supply chains, and the kind of creative corporate maneuvering that keeps compliance departments awake at night.
For Beijing, it’s another notch in the tech decoupling saga—a reminder that in the high-stakes game of silicon supremacy, politics still trumps free trade. And for investors? Just another day betting on a sector where regulatory risk moves faster than Moore’s Law.
Taiwan’s Ministry of Economic Affairs stated the waiver loss could stir uncertainty on Nanjing’s production
Without VEU privileges, TSMC’s vendors must seek individual licenses for each shipment of US-controlled semiconductor tools to Nanjing, rather than relying on automatic authorization. US regulators have assured companies that they will give the necessary approvals to keep operations going. However, companies now face doubt over how quickly permits can be obtained. License requests are already piling up, and officials are reportedly trying to find fixes to simplify the approval process.
Taiwan’s Ministry of Economic Affairs has even argued that scrapping the US waiver WOULD create uncertainty around the Nanjing factory’s output. Even so, the Nanjing plant makes up about 3% of TSMC’s total production capacity, and thus, the ministry expects little impact on Taiwan’s overall chip competitiveness. Still, TSMC’s US-listed American depositary receipts fell as much as 2.3% on Tuesday.
Currently, per Bloomberg’s data, Applied Materials, ASML, Tokyo Electron, and KLA are TSMC’s biggest suppliers. Though their stocks slid on Tuesday, Applied Materials and KLA in New York trading and ASML and Tokyo Electron through their ADRs posted steeper losses than the market overall. The companies were already operating under US curbs on China shipments, and the loss of the waiver could introduce further complications for their work with TSMC.
The BIS revoked Samsung and SK Hynix VEU licenses
Last week, US regulators stripped Samsung and SK Hynix of their validated end-user designations, saying the change was aimed at plugging “export control loopholes” that exposed US companies to unfair competition. The federal register was updated to reflect the removals and Intel’s former status for its Dalian factory, which SK Hynix later bought. Officials said the action would add roughly 1,000 new license reviews annually.
TSMC’s VEU status was never published in the Federal Register, leaving BIS nothing to formally amend. However, the practical impact doesn’t differ—suppliers to the chipmakers’ Chinese facilities will soon need US approval for restricted tool shipments.
The US has rolled out broad export restrictions to keep China from securing American chipmaking tools that could be used for advanced semiconductors and AI. Those curbs affect not only Chinese companies but also facilities owned by Samsung, SK Hynix, and TSMC in the country.
Biden’s team allowed TSMC, Samsung, and SK Hynix to continue shipping gear to their China facilities under an indefinite waiver, provided they adhered to security conditions and transparency requirements. The VEU designation, made public through US announcements for the Korean firms and in TSMC’s filings, was considered a key safeguard for their governments, since fabs depend on frequent imports.
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