U.S. Terminates TSMC Nanjing VEU Status, Future Equipment Purchases Require Individual Licenses

On September 2 (local time), Bloomberg reported that the U.S. government has formally notified TSMC of its decision to revoke the Verification End-User (VEU) status of the company’s Nanjing wafer fabrication plant. This means that, moving forward, any procurement of semiconductor equipment and materials subject to U.S. export controls by TSMC’s Nanjing facility will require individual license applications.

Earlier, Washington announced the revocation of VEU authorizations for Samsung Electronics and SK Hynix’s fabs in mainland China, with a 120-day transition period before the exemptions officially expire. Although the TSMC decision has not yet been published in the Federal Register, the practical implications are the same: once revoked, U.S. suppliers serving these fabs will need to obtain export licenses for all regulated items, including advanced manufacturing tools, spare parts, and chemical materials.

In its official statement, TSMC confirmed receipt of the notice and said that the Nanjing fab’s VEU authorization will be terminated on December 31, 2025. The company added it is closely assessing the situation, maintaining communication with U.S. authorities, and taking necessary measures to ensure stable operations at the site.

The U.S. Department of Commerce noted that license approvals may still be granted where necessary to support ongoing operations at existing facilities in China but will explicitly exclude approvals for capacity expansion or technology upgrades. In addition, the licensing process is shifting from automatic approval to case-by-case review, which is expected to introduce longer and less predictable lead times. Given that current license applications are already at a 30-year high, officials anticipate that revoking VEU authorizations for Samsung, SK Hynix, and TSMC could add approximately 1,000 new applications annually.

Industry observers suggest that some advanced process capacity at TSMC Nanjing may come under pressure once the VEU status is revoked. However, given the fab’s relatively small contribution to TSMC’s overall revenue, the broader impact on the company’s global business is expected to be limited. Moreover, as current U.S. rules do not restrict exports of mature-node equipment, the Nanjing fab’s 28nm lines—as well as other mature process facilities in mainland China—remain unaffected in the short term.

Analysts also point out that by simultaneously revoking “indefinite exemptions” while introducing a 120-day grace period, Washington may be leaving room for maneuver in U.S.-China trade negotiations. Nonetheless, the move will inevitably disrupt supply chain certainty and could strain semiconductor cooperation between the U.S. and South Korea. Data shows that around 60% of Korean chipmakers’ products are exported to mainland China, and their fab capacity there significantly exceeds that of other regions—raising concerns that the policy could undermine future investments while also hurting the companies’ own economic interests.