US Revokes TSMC’s Chip Supply Authorization to China

U.S. revokes TSMC’s license to ship chip equipment to China effective Dec 31, escalating tech trade restrictions amid national security concerns.

The Biden administration has significantly escalated its tech trade restrictions with China by revoking Taiwan Semiconductor Manufacturing Company’s (TSMC) authorization to ship advanced semiconductor manufacturing equipment to Chinese facilities, effective December 31st. This move specifically targets TSMC’s ability to maintain and expand chip production capabilities for Chinese clients like Huawei and SMIC, cutting off access to essential tools for producing sub-7nm semiconductors. The Commerce Department’s Bureau of Industry and Security issued the official cancelation of a decree under existing Entity List restrictions, citing concerns that advanced chip making equipment could be diverted to military applications. Commerce Secretary Gina Raimondo stated, "We cannot allow U.S. technology to enable advancements that threaten our national security interests. This action ensures our export controls remain effective as technology evolves."

Technically speaking, this revocation hits China’s chip ambitions where it hurts most. TSMC had maintained special authorizations to service existing equipment in Chinese fabs, including maintaining advanced extreme ultraviolet (EUV) lithography systems and deposition tools critical for cutting-edge chip production. Without access to genuine TSMC parts, software updates, and technical support, Chinese foundries will face gradual degradation in production yield and quality over the coming quarters. The order specifically covers etch tools, chemical mechanical planarization equipment, and advanced metrology systems that require regular calibration using proprietary TSMC software that will now be blocked from December 31st.

Industry reaction has been immediate and concerned. TSMC acknowledged the revocation would impact their Chinese customer support operations but emphasized compliance with all export regulations. Semiconductor Equipment and Materials International (SEMI) warned that "piecemeal revocation of existing authorizations creates uncertainty that undermines the global semiconductor supply chain." However, national security experts applauded the move, with former Defense Department official William Reinsch noting that "previous authorizations contained loopholes that allowed technological bleeding edge capabilities to reach adversaries. This action plugs those leaks effectively." The decision pushes TSMC hard to choose between its Chinese customers and continued access to U.S. semiconductor equipment and software, a choice that most analysts believe will further consolidate chip manufacturing outside China.