[News] TSMC’s Nanjing Plant Reportedly Pushes for Indefinite Exemption From US Before the May 31 Deadline

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In October 2022, the U.S. imposed a new wave of chip controls on China, but TSMC ultimately received an extension of its exemption permit from the U.S. Department of Commerce for one year. This exemption is set to expire on May 31, potentially impacting the shipment schedule of the Nanjing plant.

TSMC stated that in October last year, the company applied for an indefinite exemption from the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, and the process is still ongoing. As per a report from Commercial Times, industry sources have noted that if a new permit is not obtained, the Nanjing plant will need to apply for export permits on a case-by-case basis for certain items sourced from the U.S. starting June 1.

The U.S.-China trade war, which began in 2018, saw the U.S. impose stricter export controls in October 2022 on certain high-performance computing chips and semiconductor production items when exported to specific countries. While South Korean semiconductor companies like Samsung have received indefinite extension exemptions for semiconductor equipment controls in China, TSMC’s Nanjing subsidiary only secured a one-year exemption from the U.S. government, drawing significant attention.

Currently, TSMC operates 12-inch fabs in both Nanjing and Songjiang, Shanghai, along with 8-inch fabs, catering to local chip design companies. The most advanced process is at 16 nanometers. Over the past five years, TSMC’s revenue share from China has gradually declined from 20% in 2019 to 12% in 2023.

The latest news from TSMC indicates that it has obtained “Validated End User (VEU)” authorization, according to Commercial Times. However, according to TSMC’s annual report, there is no guarantee that the authorization obtained will not be terminated in the future.

TSMC emphasizes that while global trade barriers may increase the company’s production costs, its operations have not been significantly impacted so far. However, with the deepening of global trade tensions, related regulations, laws, and measures may still have negative effects on its business and operations. TSMC also reiterates its commitment to continue monitoring changes in trade policies and measures among major economies and taking corresponding measures based on subsequent developments.

Industry sources cited by the same report predict that the need for TSMC’s Nanjing plant to apply for export permits on a case-by-case basis in the future will inevitably increase operational procedures and extend the wafer shipment schedule in that region.

Additionally, on June 4th, TSMC’s shareholders will hold a comprehensive election for the board of directors. One of the independent directors, Ursula Burns, also serves as the Vice Chair of the Supply Chain Competitiveness Advisory Committee for the U.S. Department of Commerce. Orders from specific countries will undoubtedly receive close attention from the board of directors in the future.

Besides China, TSMC’s global expansion has also reached locations in the United States, Japan, and Germany, solidifying its goal of being a “long-term and trustworthy provider of technology and capacity.”

TSMC’s Kumamoto Plant in Japan held its opening ceremony in February, with mass production expected to begin in the fourth quarter. Meanwhile, as per a previous report from Reuters, TSMC will start construction of its first chip plant in Europe in Dresden, eastern Germany. The project is scheduled to commence in the fourth quarter of this year, with production expected to begin in 2027.

In contrast, the construction progress of its Arizona plant in the United States has been relatively slow. Due to the delay in the first phase’s production timeline from the end of 2024 to the first half of 2025, the production schedule for the second phase will also be postponed to start after 2027.

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(Photo credit: TSMC)