US Greenlights TSMC to Continuously Supply Chip Equipment to China

13 October, 2023 - 3:12 pm (49 days ago)
1 min read

In a significant easing of restrictions, Taiwanese chip behemoth TSMC confirmed its expectations of receiving an indefinite permission from the U.S. to supply American chipmaking tools to its China factory. This comes after the sweeping export controls last October where the Biden administration sought to limit China’s access to semiconductor chips produced using U.S. technology, broadening the scope of its effort to hinder Beijing’s technological and military growth.

New Provisions in Play

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) recommended TSMC apply for the “validated end-user” (VEU) program. This program would enable TSMC to bypass the need for separate approvals, serving as a long-standing authorization. The company emphasized its unfamiliarity with applying for VEU status in the past, underlining this move as a departure from its regular procedures.

Similarly, South Korea announced that its own tech giants, Samsung Electronics and SK Hynix, have also been granted the privilege to supply their China factories with U.S. chip equipment without separate approvals. Such provisions reflect the U.S.’s evolving stance on the semiconductor trade with East Asian tech giants.

Backstory of TSMC’s Involvement

TSMC, recognized as the world’s premier contract chipmaker, had previously received a year-long authorization by the U.S. for its Nanjing factory in China, which manufactures the less-advanced 28 nanometre chips. Additionally, while the U.S. seeks to diminish China’s access to top-tier AI technology, TSMC continues to operate in Nanjing during its application for VEU status.

The Larger Picture

Semiconductors have emerged as a contentious issue between the U.S. and China. Both nations are fiercely competing over access to chipmaking technology and resources. With TSMC at the forefront, Taiwan remains home to some of the world’s leading companies in microchip design and production. Amid Beijing’s increasing military pressures on Taiwan and the persistent Beijing-Washington tech feud, chip manufacturers in Taiwan find themselves navigating the tricky waters between commercial interests and geopolitical challenges.

As the world observes these shifts, the semiconductor industry is set to experience a significant transformation. The easing of restrictions signifies not only the importance of the chipmaking industry in the global market but also the intricate balance of geopolitics and commerce. The decisions made now will undoubtedly shape the industry’s trajectory and its role in global tech leadership.

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Bilgesu Erdem

tech and internet savvy, cat lover.

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