U.S. Revokes VEU Status for TSMC, Impacting Semiconductor Supply Chain in China
The United States has revoked Taiwan Semiconductor Manufacturing Company's (TSMC) Validated End User (VEU) status, effective December 31, 2025. This change requires TSMC to obtain individual export licenses for each shipment of U.S.-origin chipmaking equipment to its Nanjing facility in China, potentially delaying deliveries and complicating plant upgrades or capacity expansions.
The VEU program previously allowed approved Chinese facilities to receive specified U.S.-origin tools and technology without individual licenses. The revocation of this status means that each shipment will now require a license, potentially slowing deliveries and making capacity expansions or technology upgrades more difficult.
TSMC's Nanjing facility produces chips on 12nm FinFET, 16nm FinFET, and 28nm-class production nodes. The revocation of VEU status means that each shipment of U.S.-origin equipment to this facility will now require individual licenses, potentially slowing deliveries and making capacity expansions or technology upgrades more difficult.
In response to anticipated U.S. restrictions under the proposed Chip Equipment Quality, Usefulness, and Integrity Protection (EQUIP) Act, TSMC has reportedly removed Chinese-made equipment from its 2nm semiconductor fabrication facilities. This legislation would ban companies receiving U.S. subsidies from sourcing tools from "foreign entities of concern," including Chinese firms like AMEC and Mattson Technology. TSMC is now relying solely on suppliers from the U.S., Japan, and Europe for its 2nm production in Taiwan and Arizona to ensure compliance and secure federal incentives.
The U.S. government's actions have significant implications for the global semiconductor industry. By revoking VEU status and proposing legislation like the Chip EQUIP Act, the U.S. aims to curb China's access to advanced semiconductor technologies. This move affects not only Chinese companies but also foreign firms operating in China, such as TSMC, Samsung, and SK Hynix. The requirement for individual export licenses introduces uncertainty and potential delays in equipment shipments, which could hinder production capabilities and technological advancements in these facilities.
Following the announcement, TSMC's stock experienced a decline. As of September 2, 2025, TSMC's stock price was $228.46, down $2.41 (approximately 1.04%) from the previous close. The intraday high was $231.53, and the intraday low was $213.89. The market's reaction reflects investor concerns about potential disruptions in TSMC's operations and the broader implications of U.S. export controls on the semiconductor industry.
This is not the first time the U.S. has tightened export controls on semiconductor equipment to China. In previous years, the U.S. government has implemented various measures to restrict China's access to advanced technologies, citing national security concerns. However, the current revocation of VEU status for major players like TSMC, Samsung, and SK Hynix marks a significant escalation in these efforts, indicating a more stringent approach even towards older-generation chip production.
The revocation of TSMC's VEU status and the company's proactive measures to comply with anticipated U.S. regulations underscore the complex interplay between geopolitics and the semiconductor industry. As nations tighten controls over critical technologies, companies like TSMC are compelled to adapt their strategies to maintain operational continuity and access to key markets.