TSMC’s Nanjing fab to lose U.S. export license waiver by end of 2025

Washington plans to revoke TSMC’s Validated End User (VEU) status for its Nanjing fab, effective December 31, 2025. This ends blanket approvals for U.S.-controlled shipments to the Chinese site. TSMC says it is currently “evaluating the situation” and is in talks with the U.S. government. TSMC aims to keep its Nanjing fab running without interruptions. It is important to note that this is a policy shift that tightens controls, rather than an immediate shutdown.

Without VEU, suppliers must seek individual U.S. licenses for tools, spare parts, and certain chemicals destined for Nanjing, potentially causing delays in production. Decisions may be made with a “presumption of denial,” increasing the risk of delays if approvals do not arrive on time. U.S. revocations for Samsung and SK Hynix have already added about 1,000 license requests annually. TSMC’s case was not in the Federal Register, but the effect is the same: more licensing is needed.

Taiwan’s MOEA claims that the Nanjing fab makes up about three percent of TSMC’s total capacity. It began production in 2018 and contributed only a small share of revenue last year. Nodes in scope include 16-nanometer/12-nanometer FinFET and 28-nanometer-class logic (with the latter being older but still covered when shipped from U.S.-controlled vendors). Even though the Nanjing fab still produces older-generation chips, the fab relies on advanced etch, deposition, metrology, and lithography gear, and the revocation of VEU status may disrupt its operations.

The move mirrors the U.S. removal of VEU status for Samsung and SK Hynix China facilities as part of Washington’s push to close “export control loopholes.” TSMC’s China footprint is smaller than that of Samsung or SK Hynix, so the company-level impact is likely less severe, but license timing still adds uncertainty.

It is unlikely that TSMC can replace its tools with equipment made in China, especially for lithography. Even if replacements are found, the fab would need to requalify its processes, which could affect yield and production speed. If output slows, Chinese foundries such as SMIC and Hua Hong could capture orders, assuming these two companies have sufficient capacity.