The United States withdraws TSMC's export exemption to China, adding uncertainty to the operations of the Nanjing factory.

The U.S. government announced that it will revoke the "VEU exemption" for TSMC's factory located in Nanjing, China by the end of 2025, which means that future related suppliers must apply for export permits on a case-by-case basis to transport equipment or components into the factory, and will no longer enjoy automatic customs clearance.

The chip export exemption will expire at the end of 2025, and industry players are trying to cope.

Due to the escalating US-China chip war, the US government has been tightening semiconductor export controls against China in recent years, targeting not only domestic Chinese companies but also foreign firms operating in China. Previously, the Biden administration granted TSMC and South Korea's two major companies, Samsung (Samsung) and SK Hynix, an "indefinite exemption," stating that as long as they comply with cybersecurity regulations and report information, there would be no enhanced controls.

But now that Trump has taken office in the White House, the United States has taken further steps to tighten control over the chip supply chain. According to a Bloomberg report, TSMC has received notification from the U.S. 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 U.S. and is taking appropriate measures to ensure the continued operation of the Nanjing plant.

What is VEU exemption and why is it important?

VEU authorization ( Validated End User ) refers to special treatment provided by the U.S. government to certain reviewed multinational high-tech companies, allowing them to bypass cumbersome review procedures in Chinese factories and automatically obtain export licenses.

Especially important for wafer fabs, as production requires regular imports of critical equipment, components, and chemicals.

Samsung and SK Hynix have also received the same treatment.

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has officially announced in the Federal Register the revocation of the VEU status for Samsung, SK Hynix, and previously Intel at its Dalian facility. This move has been described by officials as "closing export control loopholes" to prevent U.S. companies from being at a disadvantage.

Although TSMC's VEU authorization has not been published in the Federal Register, it has still received official notification confirming that the exemption will expire at the end of the year.

TSMC-related suppliers will have to apply for permits on a case-by-case basis in the future.

After the exemption expires, any supplier wishing to transport semiconductor equipment, components, or related materials to TSMC's Nanjing factory, including Applied Materials (, ASML ), Tokyo Electron (, KLA ), etc., must apply for an export license on a case-by-case basis.

According to informed sources, Samsung and SK Hynix alone will see an additional approximately 1,000 license applications each year after losing VEU.

The Taiwanese authorities stated that although the predictability has decreased, the impact is controllable.

The Ministry of Economic Affairs of Taiwan stated that revoking the exemption will indeed reduce the "predictability" of operations at the Nanjing plant.

However, since the production capacity of the Nanjing factory accounts for only about 3% of TSMC's total production capacity, and it is producing the 16-nanometer technology that has been mass-produced since 2018, its impact on Taiwan's semiconductor competitiveness is limited.

( Wei Zhe-jia responded to concerns regarding "American Semiconductor": The US government has announced it will not take equity stakes, and TSMC rose by 3% )

This article discusses the U.S. revocation of TSMC's export exemption to China, adding uncertainty to the operation of the Nanjing plant, first appearing on Chain News ABMedia.