Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) saw its stock price close steady yesterday in a sign that the loss of the validated end user (VEU) status for its Nanjing, China, fab should have a mild impact on the world’s biggest contract chipmaker financially and technologically.
Media reports about the waiver loss sent TSMC down 1.29 percent during the early trading session yesterday, but the stock soon regained strength and ended at NT$1,160, unchanged from Tuesday.
Investors’ confidence in TSMC was likely built on its relatively small exposure to the Chinese market, as Chinese customers contributed about 9 percent to TSMC’s revenue last quarter, sliding rapidly from 16 percent in the same period last year, the company’s quarterly financial report showed.
Photo: AFP
Additionally, the Nanjing fab produces less advanced chips using 12-nanometer, 16-nanometer, or 28-nanometer process technologies, while advanced chips and artificial intelligence (AI) chips are mainly made in Taiwan utilizing cutting-edge process technologies such as 3-nanometer technology.
The US Department of Commerce’s Bureau of Industry and Security (BIS) on Friday last week said that it closed a loophole that allowed a handful of foreign companies to export semiconductor manufacturing equipment and technology to China license-free.
Now, these companies would need to obtain licenses to export their technology to China, it said.
The US officials have informed TSMC of its decision to end the company’s authority to freely ship chip manufacturing tools to its Nanjing fab, after revoking waivers for Samsung Electronics Co’s and SK Hynix Inc’s Chinese sites, Bloomberg reported on Tuesday night.
TSMC said it is evaluating the situation and taking appropriate measures, including communicating with the US government to prevent disruption to operations at its Nanjing fab. The site’s VEU would be revoked on Dec. 31.
The BIS’ latest move would not dent the competitiveness of Taiwan’s semiconductor industry, the Ministry of Economic Affairs said yesterday.
The US authorities did not entirely ban export of chip manufacturing tools to China, but requested chipmakers to apply for a license for shipments, the ministry said.
“That action will have rather limited impact on the nation’s semiconductor competitiveness,” Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said. “The impact on TSMC should be relatively mild.”
TSMC’s Nanjing site only made up a smaller portion, or 3 percent, of the chipmaker’s total capacity, compared with 20 percent for Samsung and 40 percent for SK Hynix, Kung said.
The waivers are limited to 16-nanometer process manufacturing tools, the ministry said.
The BIS’ action should not be linked to the imminent semiconductors tariffs under Section 232 of the US Trade Expansion Act of 1962, Kung said.
“Those are two separate things,” he said.
The US is still investigating semiconductor imports to determine the impact on national security before coming to a decision on the levy, he said.
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