TSMC faces operational risks after US ends China waiver

The United States government has revoked Taiwan Semiconductor Manufacturing Co’s (TSMC) authorisation to freely ship US-made chipmaking equipment to its Nanjing facility in Jiangsu, China, effective December 31, 2025.

Analysts from Macquarie Group warned that if license approvals are delayed, the Nanjing plant could face operational disruptions within months due to equipment shortages.

TSMC may redirect equipment orders from its Japanese facility and increase spare part inventories before the deadline, said Morningstar analyst Phelix Lee.

The Nanjing facility accounts for about 3% of TSMC’s total capacity and mainly produces cheaper 16nm and 28nm chips.

🔗 Source: South China Morning Post

🧠 Food for thought

Implications, context, and why it matters.

Export controls create uneven impact across Asian semiconductor giants

The US waiver revocation affects companies differently based on their China exposure, with TSMC facing minimal disruption while Korean manufacturers face significant challenges.
TSMC’s Nanjing facility represents just 3% of its total capacity and produces lower-margin 16nm and 28nm chips, meaning the revenue impact is even smaller than the production share suggests1.
In contrast, SK Hynix faces much steeper consequences with 30% of its DRAM and NAND production located in China, while Samsung has over a third of its DRAM output there1.
Market reactions reflected this disparity immediately, with SK Hynix shares dropping 4.4% and Samsung falling 2.3% following the announcement2.
The uneven impact demonstrates how geographic production strategies determine vulnerability to geopolitical trade restrictions in the semiconductor industry.

Current semiconductor trade restrictions echo costly historical precedents

Today’s export controls targeting Asian chipmakers parallel the 1986 U.S.-Japan Semiconductor Agreement, though through different mechanisms that may avoid some past mistakes.
The 1986 agreement limited Japanese DRAM exports to protect U.S. manufacturers but backfired by raising chip prices 30-40% for American computer companies, ultimately harming U.S. competitiveness3.
Unlike the 1986 import restrictions, current policies use export licensing to control equipment shipments rather than finished chip imports, potentially avoiding direct price increases for U.S. buyers.
However, the Department of Commerce signals it will grant licenses for existing operations while blocking capacity expansion, suggesting a more targeted approach than the blanket restrictions of the 1980s4.