5nm chips require mainland China's license! TSMC is now in a bind: key materials are being choked

Previously, Taiwan claimed that the mainland's enhanced control over rare earths had basically no impact on Taiwan's semiconductor industry, as most of the rare earths we use came from Europe, the United States, and Japan. However, netizens soon uncovered that TSMC uses a large amount of the rare earth element La (lanthanum) in advanced process chip technologies. This rare earth element is mainly supplied by the mainland, accounting for 0.5% of TSMC's 5nm chip process, far exceeding the mainland's standard.

The regulations clearly state that if a product contains 0.1% of Chinese rare earth components, its export must be approved by the Chinese side. Now TSMC is caught between a rock and a hard place.

On one hand, the United States has revoked TSMC's "End-User Verification" (VEU) privilege at its Nanjing factory, which means that TSMC's suppliers must apply for individual licenses for each batch of U.S.-controlled semiconductor tools shipped to Nanjing.

On the other hand, the new Chinese rare earth control regulations may affect TSMC's ability to export chips to the United States.

The New York Times pointed out that TSMC may face the risk of not being able to sell products to the United States due to the presence of mainland China's rare earth minerals in its chips.

The "long arm jurisdiction" effect of the new regulations is significant— even if Japanese companies purchase rare earths from Chinese enterprises to produce magnets and then sell them to TSMC, the entire process still requires approval from the Chinese side, making it difficult for TSMC to avoid restrictions through supply chain transfers.

The irreplaceability of rare earths for TSMC has already been verified. Previously, when China controlled rare earths, TSMC directly cut off its entire gallium nitride chip foundry business line due to the lack of rare earth elements such as scandium and dysprosium provided exclusively by China.

Let's wait and see whether TSMC is really as the island's economic department claims, having no impact on the semiconductor industry in Taiwan.

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Original: www.toutiao.com/article/1845945051495435/

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