Sudden Thunder! The United States Revoked TSMC's VEU Authorization: The Semiconductor Industry Earthquake

On September 2, local time, Bloomberg received shocking news that the U.S. Department of Commerce's Bureau of Industry and Security officially revoked the "verified end-user" authorization of TSMC's Nanjing plant, a decision that was like a bombshell and set off a storm in the semiconductor industry.

The revocation of VEU's authorization has instantly clouded the supply chain of TSMC's Nanjing plant. In the past, with VEU authorization, suppliers were able to enjoy the convenience of a package of permits, like having an unobstructed "fast track" without having to apply for a separate license for each controlled shipment, greatly improving the efficiency of material transportation. However, now all this is a thing of the past, and the approval model has completely changed from "one-time release" to "order-by-case approval".

This shift has brought endless uncertainty. Although the U.S. authorities are trying to reduce the administrative burden, the large backlog of existing licensing applications cannot eliminate the "time cost" and operational fluctuations in the short term. TSMC's Nanjing plant needs to continue to import equipment, spare parts and chemicals to maintain normal operation, and every delay in licensing can be like a time bomb, detonating various problems on the production line at any time. If spare parts are not replaced in time, equipment may suddenly "strike", causing production to come to a standstill; Delays in equipment maintenance will greatly reduce production efficiency; Insufficient chemical supply will make it difficult to ensure product quality.

The United States' attack on TSMC's Nanjing plant is not an isolated incident, but a continuation of a series of hegemonic acts. Previously, the United States had revoked the VEU qualifications of Samsung Electronics and SK hynix in its Chinese factories, and now it is pointing the finger at TSMC. Under the guise of "national security", the U.S. government is actually abusing its voice in the semiconductor field to try to maintain its leading position by restricting other countries' companies.

This approach not only seriously endangers the Chinese business of some of the most important companies in the semiconductor industry, but also has a huge impact on the global semiconductor industry chain. TSMC, Samsung, and SK hynix, among other giants in the semiconductor industry, have important production tasks in their factories in China. This move by the United States is like a sharp cut in the closely connected chain of the global semiconductor industry chain, making the entire industry tremble.

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In the face of strong suppression by the United States, TSMC did not sit still. TSMC made it clear in its statement that it is comprehensively assessing the situation and actively taking appropriate measures, including in-depth communication with the U.S. government, to ensure that the continued operation of the Nanjing plant is not affected.

TSMC may be able to deal with possible material shortages by stocking up in advance. Just like stocking up on enough "grain" in advance before a storm hits to ensure that production can continue on days when permit approvals are delayed. At the same time, increasing the research and development and use of alternative materials and reducing dependence on controlled goods in the United States is also a feasible path. In addition, optimizing the pace of license applications, maintaining close communication with suppliers and the United States, and keeping abreast of policy trends and approval progress will help TSMC find a way to survive in this storm.

IMP Chamber ASSY

The revocation of the VEU authorization of TSMC's Nanjing plant by the United States is a blatant challenge to the global semiconductor industry order. But we believe that TSMC and the entire semiconductor industry will continue to explore and innovate in this crisis, and find a bright way to break through the predicament.