TSMC To Restrict Orders Below 16nm From China Given That They Don’t Comply With New US Regulations

In a move widely seen as a result of heightened U.S. export controls and the ongoing semiconductor tension between the United States and China, TSMC has reportedly decided to suspend shipments of 16nm and below to certain Chinese IC design companies. The news, first reported by Taiwan Economic Daily, indicates TSMC will only honor orders at advanced nodes if the packaging and testing processes (OSAT) are handled by facilities approved by the U.S. Bureau of Industry and Security (BIS). This guideline appears to have been in effect since January 31.

The background to this development lies in the scrutiny TSMC faced recently, when reports surfaced that chips produced by the Taiwanese foundry ended up in Huawei’s advanced AI processors. Influenced by stricter U.S. export regulations and the “chip war” scenario, TSMC is seeking to avoid potential violations of American technology rules—especially as the U.S. government tightens controls on advanced node exports to China. TSMC’s new rule suggests that only assemblies overseen by BIS-compliant OSAT firms will move forward.

Chinese IC design houses reacting to the policy have reportedly shifted packaging contracts to the U.S.-sanctioned OSAT providers, likely mitigating any major disruption to TSMC’s order flow. According to sources, sub-16nm revenue accounts for less than 10% of TSMC’s total financials, so the measure is not expected to hurt TSMC economically. At the same time, many Chinese semiconductor companies supply or collaborate with American and European automotive clients, underscoring the need for a stable global supply of mature process nodes.

From a broader perspective, industry observers note that the international semiconductor landscape is becoming increasingly regulated, and TSMC’s decision highlights how major foundries are balancing compliance with global demand. It remains to be seen how China’s domestic markets will fully respond, but initial signs point to quick adaptation rather than overt retaliation.

Do you believe TSMC’s new restrictions on sub-16nm orders for Chinese IC design firms are necessary steps toward compliance with U.S. regulations, or do they risk harming longstanding supply chain partnerships? Share your views on how this might shape China’s strategy for advanced semiconductor development.