Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) is confronting near-term operational risks at its Nanjing facility after the U.S. government withdrew its fast-track authorization for importing chipmaking equipment, according to analysts.
The U.S. removed Taiwan Semiconductor's Validated End User (VEU) status effective December 31, forcing the company to seek individual licenses for future shipments to its Jiangsu facility.
Macquarie Group warned that if approvals are delayed, the fab could face equipment shortages within months, SCMP reported on Sunday.
Also Read: Taiwan Semiconductor Faces New Export Curbs As US Revokes Nanjing Authorization
To cushion the impact, Morningstar's Phelix Lee noted that Taiwan Semiconductor may redirect equipment originally intended for its Kumamoto plant in Japan and stockpile spare parts ahead of the deadline.
Still, analysts emphasized a limited long-term effect since the Nanjing facility accounts for just 3% of Taiwan Semiconductor's total capacity and produces lower-margin 16nm and 28nm chips. Lee added that the revenue contribution is even smaller, making the exposure relatively minor compared to rivals.
By contrast, SK Hynix could face greater disruption, with about 30% of its DRAM and NAND output based in China. The U.S. Bureau of Industry and Security expressed willingness to approve licenses to sustain existing operations, offering a potential buffer.
The revocation comes as Washington continues tightening export controls to limit China's access to advanced semiconductor technology, a policy that has already forced chipmakers to navigate complex regulatory hurdles.
Despite the latest setback, Taiwan Semiconductor shares have climbed more than 23% year-to-date, fueled by rising demand from Big Tech firms including Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Meta Platforms (NASDAQ:META), whose AI ambitions are driving industry-wide chip demand.
The gains, however, are tempered by persistent geopolitical tensions between Washington and Beijing.
Price Action: TSM stock is trading lower by 0.29% to $242.71 premarket at last check Monday.
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