TSMC might have given in to pressure from the U.S. to make a big change

Concerned that the U.S. could stop TSMC from producing advanced 2nm chips, TSMC is removing Chinese equipment from its fabs set to produce chips using TSMC’s 2nm process node. The world’s leading contract chip foundry will start full-scale production using the 2nm process node later this year at a facility in Hsinchu. That will be followed by the start of 2nm production at a fab located in Kaohsiung. TSMC could have four plants running next year that will deliver 60,000 wafers monthly using the 2nm process,

TSMC was originally set to remove the Chinese chipmaking equipment from its factories producing 3nm chips, but realized that doing this would expose these fabs to too many complexities and issues to make the results favorable. In the past, TSMC has used gear made from Chinese firms, such as companies like AMEC and Mattson Technology, but has dropped these vendors while putting together its 2nm facilities. Additionally, TSMC is looking through the chemicals and materials it uses while manufacturing chips in order to eliminate more items sourced from China.

It is assumed that TSMC is eliminating equipment, tools, and other items from China that it needs to produce chips in order to curry favor with the U.S. The proposed Chip EQUIP Act, a bipartisan bill introduced in 2024, would add an amendment to the CHIPS and Science Act. 

This amendment would prohibit projects funded by the CHIPS and Science Act from buying semiconductor manufacturing equipment made by entities owned or controlled by the Chinese government. It would also apply to equipment sourced from other foreign countries of concern. While this bill has been introduced in both the House and Senate, it has yet to pass any committee or face a vote on the floor of either chamber. If passed it would affect the fabs being built by TSMC in Arizona.

TSMC hasn’t made an announcement that would reveal whether it is removing the equipment from China because it doesn’t meet the standards required by TSMC, or whether it is being done to appease the U.S. The company counts as clients top tech companies such as Apple, Qualcomm, MediaTek, Qualcomm, Broadcom, Nvidia, and AMD.