U.S. revokes export waiver for TSMC, SK Hynix, Samsung, restricting China chip production.

The US has revoked a waiver allowing Taiwan Semiconductor Manufacturing Co. (TSMC), SK Hynix, and Samsung to export chipmaking equipment and technology to their manufacturing plants in China. This change removes a fast-track export privilege, effective December 31, and requires US export licenses for shipments of chipmaking tools to TSMC's Nanjing facility. The policy change reflects the US's broader efforts to tighten control over semiconductor equipment and technology exports to China, strengthening US power over chip production in China.

The United States has revoked waivers that allowed Taiwan Semiconductor Manufacturing Co. (TSMC), SK Hynix, and Samsung to export chipmaking equipment and technology to their manufacturing plants in China. The change removes a fast-track export privilege, effective December 31, and requires US export licenses for shipments of chipmaking tools to TSMC's Nanjing facility. The policy change reflects the US's broader efforts to tighten control over semiconductor equipment and technology exports to China, strengthening US power over chip production in the country.

The US Commerce Department announced the decision, which mirrors steps taken to revoke similar waivers for Samsung and SK Hynix. These companies, along with TSMC, have been operating under a validated end-user (VEU) status that allowed them to ship essential gear to their China-based facilities without individual approvals. The revocation of these waivers means that suppliers will now need to seek US licenses for each shipment, potentially creating significant bureaucratic hurdles and delays.

TSMC, in a statement, acknowledged the US government's decision and expressed its commitment to ensuring the uninterrupted operation of its Nanjing site. The company's shares slipped as much as 2.3% on Tuesday following the announcement. The Nanjing facility, which began production in 2018, accounts for about 3% of TSMC's overall production capacity. The campus houses technology as advanced as the 16-nanometer process, which first became commercially available more than a decade ago.

The policy change comes as part of a broader effort by the US to limit China's access to advanced chipmaking technology. The US has been implementing stricter export controls on semiconductor materials and equipment, aiming to curb China's AI ambitions. The Commerce Department's Bureau of Industry and Security, which oversees semiconductor export controls, has not immediately responded to requests for comment.

The revocation of the VEU status for TSMC, Samsung, and SK Hynix will require US officials to process an additional 1,000 license requests annually, according to a federal notice. The situation highlights the extent of Washington's influence in, and control over, the supply chain for electronic components that power everything from microwaves to phones to data centers training artificial intelligence algorithms.

The US has previously granted waivers to these companies to continue making shipments to their China facilities, so long as they comply with security requirements and disclose certain information. However, the revocation of these waivers will now force the companies to seek licenses for any shipments of US semiconductor manufacturing equipment to China. The ruling will have significant implications for both companies, with Samsung and SK Hynix producing a substantial portion of their NAND flash memory chips in China.

The move is part of a broader effort by the US to tighten its stance on semiconductor technology transfer to China. The Commerce Department has stated that it will still consider license applications to avoid immediate operational shocks but has made clear that future upgrades and capacity expansions using US technology in China will be far more difficult.

The situation highlights the complex geopolitical dynamics surrounding semiconductor production and export controls. As the US tightens its grip on chipmaking technology, it is likely to have significant implications for the global semiconductor industry and China's ability to compete in the sector.

References:
[1] https://finance.yahoo.com/news/us-pulls-tsmc-waiver-china-203406976.html
[2] https://wccftech.com/after-samsung-sk-hynix-tsmc-wont-be-able-to-ship-equipment-to-china/
[3] https://www.ainvest.com/news/samsung-sk-hynix-shares-plummet-tightens-chip-export-rules-2509/