The United States has once again taken a step in its strategic battle for control over the semiconductor industry, targeting its most significant global partner: Taiwan Semiconductor Manufacturing Company (TSMC). The company, which accounts for over 70% of the world’s advanced chip production, will lose the exemption that allowed it to import U.S. equipment to its Nanjing plant in China starting December 31, 2025.
This measure, signed by President Donald Trump, puts TSMC on the same footing as other tech giants like Intel, Samsung, SK Hynix, and ASML, who for months have been required to obtain licenses for each machine, spare part, or update crossing U.S. borders.
End of the special treatment for TSMC
For months, TSMC enjoyed a relative advantage thanks to a special authorization allowing it to maintain a smooth supply of equipment to its factory in China. This plant, focused on nodes from 16 to 12 nanometers, produces chips considered “mature,” far from the cutting-edge 3 nm technology powering high-end smartphones and AI data centers.
However, Washington wants to leave no loopholes. Even though these semiconductors are not state-of-the-art, they are still critical for the Chinese industry, serving as the foundation for scaling processes and maintaining a supply chain that Beijing is urgently trying to advance.
The U.S. message is clear: there will be no exceptions, not even for the most strategic foundry on the planet.
Limited impact on revenue, strong in politics
The Nanjing plant accounts for barely 3% of TSMC’s revenue. However, the decision’s effects go beyond economics. The impact is political and symbolic.
On one hand, it shows that Washington is prepared to pressure even its closest allies if it means tightening the grip on China. On the other, it sends a warning to the rest of the industry: the U.S. semiconductor policy prioritizes national security over commercial considerations.
Following the announcement, TSMC’s shares fell between 1% and 2.3%. A moderate decline compared to the heavier losses experienced by competitors like SK Hynix, Samsung, or Intel in similar situations.
A dual-track industrial strategy
The regulatory tightening cannot be understood without the parallel strategy driven by Washington at home. The U.S. aims not only to curb China’s access to advanced technology but also to attract manufacturing facilities and capacity to its own territory.
The plan combines multimillion-dollar subsidies under the CHIPS and Science Act, rescues for Intel and other strategic manufacturers, and tax incentives to promote new plants on American soil. Tariffs on hardware remain on the table but have been temporarily deferred.
The dual goal is to ensure that the supply chain for next-generation chips does not end up in Beijing and to bolster U.S. technological sovereignty in a sector critical for the future economy and security.
TSMC caught between two fires
For TSMC, the situation is particularly complex. The company has already committed nearly $100 billion to building new fabs outside Taiwan, in countries like the U.S., Japan, and Germany.
This reflects the pressure from its global clients seeking to diversify risks against a hypothetical crisis in the Taiwan Strait but also the need to avoid upsetting either Washington or Beijing.
China, for its part, sees its technological ambitions suffocating under international sanctions. Although it has repeatedly announced chips manufactured using 7 nm and even 5 nm processes with alternative methods, the lack of access to EUV lithography — monopolized by the European ASML under the control of Western sanctions — seriously limits its manufacturing capacity at scale.
A point of no return?
The decision against TSMC can be seen as a turning point. The U.S. not only seeks to prevent China from reaching the technological frontier but is also willing to bring major foreign players under its regulatory umbrella.
The near future will depend on whether China manages a “show of strength” translating its announcements into real, large-scale production of advanced chips. Otherwise, the technological gap might widen further over the next decade, cementing Western leadership in the semiconductor industry.
Frequently Asked Questions (FAQ)
What is the impact on TSMC of losing the exemption in China?
The economic impact is limited, as the Nanjing plant accounts for just 3% of the company’s revenue. However, the decision is political and strategic, removing any preferential treatment for TSMC.
Why is the U.S. also pressuring its allies?
Because Washington’s strategy aims to close all avenues of technological transfer to China, even if it complicates the operations of partners like TSMC or ASML.
China can’t manufacture advanced chips; why is restricting nodes of 16 or 12 nm so significant?
Because these “mature” nodes are still essential for industrial, military, and mass consumer applications. They also serve as a foundation for China to advance towards more sophisticated processes.
What does this measure mean in the global context?
It reinforces the idea that the semiconductor war is no longer just a trade conflict but a geopolitical battle that will determine which powers dominate the digital economy in the coming decades.
via: FT