TSMC's Nanjing Factory Will Be Granted A One-Year Exemption Period, But Will Not Be Allowed To Carry Out Technology Upgrades!

According to media reports, after Samsung and SK Hynix both obtained "indefinite exemption" permits from the U.S. Department of Commerce for their wafer fabs in China, TSMC may also have obtained a one-year exemption.They can maintain their current operations in China for the foreseeable future, but important technology upgrades will be difficult.

On October 9, the South Korean government said Samsung and SK Hynix were designated as "verified end users," which would allow them to import U.S. chip manufacturing equipment for their existing Chinese factories without seeking separate U.S. approval. The South Korean presidential office said in the announcement that there is no end date for this designation.

South Korea and the United States have agreed on a list of chip manufacturing equipment subject to sanctions. The agreement is crucial as it allows Samsung and SK Hynix to maintain their operations in China and make minor technology updates without violating established guidelines. Of course, there is a caveat: if Samsung and SK Hynix seek financial aid under the US Chip and Science Act, their businesses in China will be restricted.

TSMC is also expected to receive another one-year exemption like last year, the Wall Street Journal reported, citing people familiar with U.S. government operations. It's unclear whether TSMC will be designated a "verified end user" like Samsung and SK Hynix. The report added that the United States has told TSMC that it can maintain operations in China for the foreseeable future as long as it does not undergo major technology upgrades.

Currently, TSMC’s Nanjing plant has reached an advanced process production capacity of 20,000 pieces, mainly 12nm and 16nm. At the same time, the Nanjing factory has also increased the production capacity of 20,000 pieces of 28nm process, which is now basically completed. The United States has made it clear to chip contract manufacturers that while it can maintain current operations, any major technological advancements at Nanjing-based Fab 16 are currently unavailable. It's unclear whether progress means capacity upgrades, process technology upgrades or both.