The US government announced that it will revoke TSMC's VEU exemption for its Nanjing, China plant by the end of 2025. This means that suppliers will no longer be able to automatically clear customs for equipment or components shipped into the plant and will have to apply for export licenses on a case-by-case basis.
Chip export exemption expires at the end of 2025, and companies are trying to cope
Due to the escalating US-China chip war, the US government has been tightening semiconductor export controls on China in recent years, targeting not only domestic Chinese companies but also foreign companies with factories in China. Previously, the Biden administration granted "indefinite exemptions" to TSMC and two major South Korean companies, Samsung and SK Hynix, allowing them to avoid tightening controls as long as they met cybersecurity regulations and reported information.
Now that Trump has taken office, the US has further tightened its control over the chip supply chain. According to Bloomberg , TSMC has received notification from the US government that the VEU authorization for its Nanjing plant will expire on December 31, 2025. The company emphasized that it is currently in communication with the US and taking appropriate measures to ensure the continued operation of the Nanjing plant.
What is the VEU exemption and why is it important?
VEU authorization (Validated End User) refers to special treatment provided by the US government to some audited multinational high-tech companies, allowing them to bypass cumbersome review procedures in their Chinese factories and automatically obtain export licenses.
This is especially important for wafer fabs, as production requires regular imports of key equipment, components and chemicals.
Samsung and SK Hynix also suffered the same treatment
The Bureau of Industry and Security (BIS) within the U.S. Department of Commerce has officially revoked the VEU designations of Samsung, SK Hynix, and, previously, Intel's Dalian fab. The move was described by officials as "closing an export control loophole" and preventing U.S. companies from being disadvantaged.
Although TSMC’s VEU authorization was not published in the Federal Register, it still received official notification confirming that the exemption would expire at the end of the year.
TSMC's suppliers will have to apply for licenses on a case-by-case basis in the future
After the exemption expires, all suppliers who wish to ship semiconductor equipment, components or related materials to TSMC's Nanjing plant, including Applied Materials, ASML, Tokyo Electron, KLA, etc., must apply for export licenses on a case-by-case basis.
According to people familiar with the matter, Samsung and SK Hynix alone will face an additional 1,000 license applications each year after losing VEU.
Taiwanese officials said that although the impact of reduced predictability is controllable
Taiwan's Ministry of Economic Affairs stated that revoking the exemption would indeed reduce the "predictability" of the Nanjing plant's operations.
However, because the Nanjing plant's production capacity only accounts for about 3% of TSMC's total production capacity, and it produces 16nm technology that has been mass-produced in 2018, its impact on Taiwan's semiconductor competitiveness is limited.
The article "US revokes TSMC's export exemption to China, adding uncertainty to Nanjing plant operations" first appeared on ABMedia ABMedia .
