Chinese chip designers seeking advanced silicon from manufacturers like TSMC face a new hurdle. Reports indicate Taiwan's TSMC, the world's largest chip manufacturer, will implement tighter restrictions. Certain chip orders for 16nm and smaller processes will require packaging at facilities approved by the US government. Specifically, this means OSATs on a US whitelist.
Why the Change? US Export Sanctions Drive New Rules
This move is not arbitrary. It is directly linked to tightening export sanctions from the United States. The US government is intensifying efforts to control the flow of advanced technology to China. This new rule adds another layer to existing restrictions. Chinese companies needing chips from TSMC may need to reroute their packaging stage to US-approved OSATs. This detour is necessary to maintain access to TSMC's chip production.
TSMC Sees Minor Ripple, Not Major Impact
The financial impact on TSMC is likely to be limited. While China represents a market, contributing about 8% of their 2023 revenue, TSMC's primary income comes from cutting-edge technologies at 7nm and below. These advanced nodes generate over 70% of their income. Furthermore, demand for 16nm chips extends beyond China, including sectors like automotive in the US and Europe. Therefore, this shift is not expected to significantly disrupt TSMC's overall business.
Deadline Set: January 31, 2025
The new regulations are slated to take effect on January 31, 2025. From this date, TSMC will require certification from the packaging company, or US-approved OSAT packaging for 16nm and smaller chips to be shipped. Reports suggest Chinese firms are already adapting. They are shifting packaging work to maintain access to TSMC's production capabilities. Adaptation is crucial for continued operation.
US Export Controls: The Broader Context
These measures align with broader US export controls. The US aims to restrict exports to China and other "restricted" countries for chips with at least 30 billion transistors made using 14nm, 16nm or smaller processes. An export license from the US Department of Commerce is generally needed. However, exceptions exist. US, Taiwanese, and allied companies can apply for licenses for approved customers. Chips below the transistor count threshold are generally permitted. Chips packaged by approved OSATs are also typically allowed.
While US rules are broad and could technically affect even consumer CPUs and SSD controllers, TSMC appears to be adopting a stricter interpretation. This approach goes beyond the explicit requirements of the US government.
Licenses for Big Players, Tighter Limits Elsewhere
Major players like AMD, Apple, Intel, MediaTek, and Nvidia will likely secure licenses, even for high-performance processors. Yet, restrictions are tightening even for them. Nvidia, for example, now requires export licenses for mainstream GPUs sold to China, which were previously unrestricted. The primary focus is on AI chips destined for China, Iran, and Russia. The goal is to prevent blacklisted companies from acquiring high-performance processors through loopholes. TSMC's actions indicate a strong alignment with these objectives, going beyond minimum compliance.
Official Confirmation Pending
We have contacted TSMC for official confirmation to verify all details. We will provide updates as soon as we receive a response. Stay informed.
