Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s leading chipmaker, is removing Chinese-made equipment from its most advanced 2-nanometer chip production lines to avoid potential disruptions from U.S. regulations, several sources told Nikkei Asia.
The Taiwanese company will not use Chinese tools in its cutting-edge 2-nm facilities, scheduled to begin mass production this year in Hsinchu and Kaohsiung, Taiwan. TSMC is also expanding operations in Arizona, where it plans to manufacture chips of similar sophistication.
The decision comes amid proposed U.S. legislation, including the Chip EQUIP Act led by Senator Mark Kelly, which could restrict companies receiving federal funding or tax credits from using equipment sourced from “foreign entities of concern,” widely interpreted as including Chinese suppliers.
Chinese equipment has been part of TSMC’s previous advanced production lines. Tools such as etching machines from Advanced Micro-Fabrication Equipment Inc. China (AMEC) and Mattson Technology, acquired by Beijing E-Town Semiconductor Technology in 2016, have previously been utilized. However, adapting to geopolitical uncertainties has prompted TSMC to phase out these tools from its latest 2-nm node.
Sources told Nikkei that TSMC is also reviewing all materials and chemicals used in its Taiwanese and U.S. operations to reduce reliance on Chinese supplies. At the same time, the company is working more closely with local suppliers in China to align with domestic policy priorities, aiming to bolster supply chain resilience.
About a year ago, TSMC had sought to remove Chinese equipment from its 3-nm technology, which began mass production in 2022. However, changing qualified suppliers proved time-consuming and risky for production yields. Starting with the 2-nm node allows the company to mitigate potential U.S. regulatory risks while ramping up mass production.
TSMC Chairman and CEO C.C. Wei told Nikkei that the Arizona expansion could eventually account for roughly 30% of the company’s most advanced chip production, defined as 2-nm and smaller.
Meghan Harris, a former senior U.S. administration official and semiconductor expert, told Nikkei Asia, “The U.S. has to start taking measures to prevent China’s tool makers from entering, distorting, and potentially destroying the global market. Certain tools are really close to becoming competitive.”
Meanwhile, Chinese semiconductor firms are boosting domestic equipment production. While lithography tools remain dominated by the Netherlands’ ASML, other segments show significant progress. Naura, China’s top chip equipment maker, is now the world’s sixth-largest in the sector, according to Nikkei Asia.
TSMC declined to comment on specific equipment but said, “As always, TSMC’s global procurement strategy focuses on robust risk management systems and close partnerships with suppliers to continuously develop multi-source supply solutions and diversify its global supplier base.”
