The United States draws the exemption from TSMC for chip supplies shipments

US officials have recently informed the TSMC of their decision to end the so-called end user of the Taiwanese chip manufacturer, or WEU, the status of his Nanjing site. The steps of the action mirrors have taken to revoke the designations of WEU for Chinese installations belonging to Samsung Electronics Co. and SK Hynix Inc. The exemptions should exhale in about four months.

Washington’s move means that TSMC, Samsung and SK Hynix suppliers will have to request individual approvals when wishing to send semiconductor equipment and other equipment covered by American export controls to Chinese installations affected, instead of the general authorization that these suppliers have currently due to the veu status of plants.

TSMC shares slipped up to 1.3% in Taipei, while suppliers, including Tokyo Electron Ltd., dropped by around 2%.

“TSMC has received a notification from the US government that our widowed authorization for TSMC Nanjing will be revoked from December 31, 2025,” the company said in a statement. “While we assess the situation and take appropriate measures, including communication with the American government, we are fully determined to ensure the uninterrupted functioning of TSMC Nanjing.”

The revocation adds new obstacles to the Chinese operations of some of the most important companies in the semiconductor sector, from two Tamias manufacturing powers which are also American allies. Although US officials said they intended to issue the necessary licenses to maintain these operational installations, the quarter of work introduces a certain uncertainty about waiting times to really obtain these permits. In a statement, the Taiwan Ministry of Economic Affairs said that the revocation of the exemption from the United States would have an impact on the predictability of the Nanjing factory operations.

Officials are currently working on solutions to facilitate bureaucratic burden, said people familiar with the case, in particular given a large volume of existing license requests. The revocation of the WEU status of Samsung and SK Hynix, for example, will oblige US officials to deal with 1,000 additional permits per year, according to a federal opinion.

Compared to Samsung and SK Hynix, which house a significant part of their production in China, the manufacturing imprint of TSMC in the second world economy is relatively low. The company’s Nanjing site began production in 2018 and contributed to a small fraction of total TSMC income last year – and around 3% of the company’s overall production capacity, according to the Taiwanese ministry.

The American move will not affect the competitiveness of the Taiwan flea industry, the ministry said. The campus in boarding school is home to technology as advanced as the 16 nanometers process, which has become trade in commerce over ten years ago.

The situation highlights the extent of Washington’s influence and control of the electronic component supply chain that feeds everything, from microwaves to data centers that form artificial intelligence algorithms, even when the plants in question are used by three non-American companies in a foreign country.

The United States has largely limited China access to materials and equipment that could be used to make advanced fleas, part of a series of orders designed to limit the prowess of IA of the Asian nation. The limits of exports affect sales not only to Chinese companies, but all the facilities that are physically in the country, including the factories of Samsung, SK Hynix and TSMC.

Under the administration of President Joe Biden, the trio of companies obtained an indefinite exemption to continue to make shipments in their Chinese facilities, as long as they meet security requirements and disclose certain information to the United States government. This designation of WEU – which US officials announced for Samsung and SK Hynix, and that TSMC was published in an annual report – was an absolute priority for flea manufacturers and foreign government officials, since semiconductor factories need regular imports of everything, spare parts to chemicals.

The loss of derogations has a certain uncertainty for the best suppliers to TSMC, Samsung and SK Hynix, including machine companies such as Applied Materials Inc., ASML Holding NV, Tokyo Electron and Kla Corp. ASML refused to comment, while the applied materials had no immediate comments. Kla and Tokyo Electron did not respond to requests for comments.

Applied Materials and Kla Applied Actions fell in New York on Tuesday, as are ASML deposit receipts, losses exceeding the larger market.

The Office of Industry and Security of the Commerce Department, which oversees semiconductor export controls, announced its widowed decision for the two South Korean companies last week, saying that the United States closed “export control gaps” which put American companies “in competitive disadvantage”.

The agency has also officially canceled the status of Samsung and SK Hynix in the Federal Register, a public account of American regulations – and they did the same for a widowed designation given to Intel Corp., for an installation in Dalian, in China, which SK Hynix has since acquired. Bis did not respond to a request for comments on the revocation of TSMC’s exemption.

Given that the WSMC’s WEU status has never been published in the federal register in the first place, there was no public settlement to be modified in the same way as for other affected companies. All in all, however, the net effect on TSMC, Samsung and SK Hynix derogations is the same.