TAIPEI (Taiwan News) — TSMC will exclude Chinese-made equipment from its most advanced chip plants, a move aimed at sidestepping potential US restrictions that could complicate production and subsidies, Nikkei Asia reported Monday.
Sources said the world’s largest contract chipmaker will not use Chinese tools in its new 2 nm production lines. Generally, the smaller the process the more advanced the chip. Mass production is set to begin this year in Hsinchu, with a second site in Kaohsiung and a third plant under construction in Arizona.
The decision comes as Washington considers new rules that would bar recipients of US subsidies or tax credits from using Chinese manufacturing tools. Lawmakers led by Senator Mark Kelly are pushing the Chip Equip Act, which would prevent companies benefiting from federal support from sourcing equipment from “foreign entities of concern,” widely understood to include Chinese suppliers.
TSMC has used Chinese equipment in the past, including etching tools from Advanced Micro-Fabrication Equipment Inc. China and Mattson Technology, which was acquired by Beijing E-Town Semiconductor Technology in 2016. However, shifting away from Chinese suppliers reflects growing pressure on the global chip industry to reduce exposure to geopolitical risks.
Sources noted that TSMC is also reviewing its supply of chemicals and chipmaking materials in Taiwan and the US, to reduce reliance on Chinese sources. At the same time, the company is expected to deepen partnerships with suppliers in China for its operations there, aligning with Beijing’s industrial policies.
The effort is not new. About a year ago, TSMC explored removing Chinese tools from its 3 nm production lines, which entered mass production in 2022. However, replacing qualified suppliers is a slow and risky process that can affect yields and product quality. Executives decided to implement the shift more decisively at the 2 nm level, where mass production is only just ramping up.
TSMC Chair and CEO C.C. Wei (魏哲家) has said the company is accelerating its Arizona projects, which could eventually account for about 30% of TSMC’s most advanced production, defined as 2 nm and below.
Industry experts warn that China’s toolmakers are getting closer to catching up in certain areas. “The US needs to prevent China from being able to indigenously produce tools by controlling access to critical sub-components and preventing Chinese toolmakers’ entry into US fabs at a minimum,” Meghan Harris, a former senior US administration official, told Nikkei.
While Chinese lithography tools remain far behind global leader ASML of the Netherlands, companies such as Naura have made strides in other segments. Naura has now become the world’s sixth-largest chip equipment maker, trailing only ASML, Applied Materials, Tokyo Electron, Lam Research, and KLA.
Asked for comment, TSMC declined to specify which equipment suppliers it uses but said its global procurement strategy is built on risk management, diversification, and collaboration with suppliers.
