The United States has moved to tighten restrictions on China’s access to advanced semiconductor technology, revoking a waiver that allowed Taiwan Semiconductor Manufacturing Company (TSMC) to ship certain chip supplies to Chinese clients. The decision marks a significant escalation in Washington’s ongoing effort to curb Beijing’s technological ambitions and secure control over the global semiconductor supply chain.
The End of a Strategic Exemption
TSMC, the world’s largest contract chipmaker and a critical supplier to companies worldwide, had previously operated under a U.S.-issued waiver that allowed it to continue sending select semiconductor products and manufacturing equipment to China despite sweeping export controls introduced in 2022.
That carve-out has now been rescinded, according to U.S. officials, closing one of the last remaining channels for China to obtain cutting-edge supplies. 
“The waiver was designed as a temporary measure,” one senior U.S. trade official explained. “As China accelerates efforts to advance its domestic chip capabilities, we are tightening controls to protect national security and ensure sensitive technology does not fall into adversarial hands.”
Impact on China’s Semiconductor Ambitions
The waiver’s removal represents a blow to China’s chip ecosystem, which has struggled to replicate the most advanced nodes due to lack of access to high-end lithography machines, chip design software, and specialized materials.
- Huawei, which recently re-entered the smartphone market with its self-developed advanced chipsets, may face new constraints on sourcing critical components.
- China’s foundries, including SMIC (Semiconductor Manufacturing International Corp.), will likely be squeezed further in their efforts to catch up with Taiwan and South Korea in advanced manufacturing.
- The broader Chinese tech sector—ranging from artificial intelligence developers to consumer electronics giants—may feel ripple effects as supply bottlenecks intensify.
“This is another reminder that China remains highly dependent on foreign chip technology,” said a Beijing-based semiconductor analyst. “It underscores the vulnerability of China’s long-term self-sufficiency goals.”
TSMC’s Delicate Balancing Act
For TSMC, the decision places the company in a difficult position. While the chipmaker complies strictly with international export rules, China accounts for more than 10% of its revenue, making it a key market. Losing access to this business risks straining relationships with Chinese clients, though the company’s global customer base—from Apple to Nvidia—provides significant insulation.
TSMC has been diversifying its footprint under geopolitical pressure, investing billions in new fabs in the United States, Japan, and Germany. Washington has actively courted TSMC to bolster U.S. chipmaking capacity, offering subsidies under the CHIPS and Science Act.
Analysts say the waiver’s end highlights the geopolitical tightrope TSMC must walk—balancing its role as a linchpin of global electronics with the competing interests of the U.S. and China.
Broader U.S.-China Tech Tensions
The move against TSMC is part of a broader U.S. campaign to choke China’s access to advanced semiconductors, which Washington views as vital to military and AI development. Export bans already bar American firms like Nvidia and AMD from selling their most advanced AI chips to Chinese customers.
By tightening exemptions for foreign companies such as TSMC, Washington is signaling it is willing to use its regulatory power to push allies into line with its national security agenda.
Beijing, for its part, has condemned U.S. chip restrictions as an abuse of trade power, accusing Washington of attempting to contain China’s rise. Chinese officials have pledged to accelerate domestic R&D spending and state-backed chip initiatives, though experts say catching up may take a decade or more.
Market and Global Supply Chain Fallout
Financial markets reacted quickly to the news. Shares of TSMC dipped as investors priced in the potential revenue hit from reduced Chinese sales. Meanwhile, gold and safe-haven assets climbed as traders factored in the risk of worsening U.S.-China tensions.
Global supply chains, already strained by pandemic-era disruptions and geopolitical friction, face further uncertainty. Many multinational companies rely on TSMC chips, and additional constraints on supply could ripple through industries ranging from smartphones to automobiles.
The Strategic Outlook
The revocation of TSMC’s waiver is more than a regulatory adjustment—it is a strategic signal. Washington is making clear that advanced chip technology will remain tightly controlled, even at the cost of straining relationships with key allies and global corporations.
For TSMC, the next chapter will test its agility: can it sustain growth while navigating the pressures of the U.S.-China rivalry? For China, the decision raises the stakes in its long-term campaign for semiconductor independence.
One thing is certain: the global tech war is far from over—and semiconductors remain at its core.
