TSMC secures permanent U.S. approval for tool supply to Nanjing plant

Taipei, May 24 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC) has been granted a permanent waiver from the U.S. government on semiconductor equipment supplied to its wafer fab in Nanjing, China.

In a statement through an email message released Thursday, TSMC, the world's largest contract chipmaker, said the U.S. Department of Commerce (DOC) issued the permanent approval recently, making it unnecessary for the company to apply to the U.S. authorities for a temporary license before shipping semiconductor tools to its Nanjing compound.

TSMC said the permanent waiver replaces the temporary approval issued by the DOC starting from October 2022.

The chipmaker had been advised by the U.S. Bureau of Industry and Security under the DOC for the Validated End-User (VEU) program to secure a permanent wavier for its operations in China with the Biden administration after a sweeping set of export controls was imposed last October.

Those controls include an attempt to cut off China from certain semiconductor chips made using U.S. developed equipment in a bid to slow down Beijing's technological development.

The VEU program, which was launched in 2007, allows qualifying companies to receive certain U.S.‑controlled items without separate export licenses, and industries benefiting from this program include the electronics, semiconductor equipment and chemicals sectors.

After securing the permanent approval, TSMC said its Nanjing plant is expected to operate as normal.

TSMC's Nanjing plant is a 12-inch wafer foundry, rolling out chips made on the mature 28 nanometer process.

According to international news media, South Korea's Samsung Electronics Co. and SK Hynix Inc., the two largest dynamic random access memory (DRAM) chip suppliers in the world, were granted an indefinite wavier from the U.S. government to supply IC production tools to their factories in China for technology upgrades before TSMC secured VEU status.

Despite the performance waiver under the VEU program, chipmakers still face other restrictions on their investments in China.

In March 2023, the DOC announced the so-called National Security Guardrails, which ban recipients of U.S. government subsidies from investing in most semiconductor manufacturing in foreign adversary countries for 10 years after the date on which they receive funding.

The DOC named China, Russia, Iran and North Korea as adversary countries.

In early April, TSMC announced its subsidiary TSMC Arizona signed a non-binding preliminary memorandum of terms (PMT) with the DOC, which will provide up to US$6.6 billion in direct funding under the CHIPS and Science Act.

At the same time, TSMC also announced it will build a third wafer fab in Arizona, boosting its total investment in the U.S. state from US$40 billion to more than US$65 billion.

The first fab in Arizona is scheduled to start mass production in 2025, using the advanced 4nm process and the second is set to mass produce chips in 2028 using the 3nm and 2nm processes.

The 3nm process is the latest technology for which TSMC has began commercial production, while the 2nm process is under development with mass production scheduled for 2025 in Taiwan.

The third fab will produce chips using 2nm or more advanced processes, with production set to begin by the end of this decade, according to TSMC.