A new wave of US sanctions on foreign companies in China has not been as strong as it might seem at first sight, and it is known that the South Korean company SK Hynix has been freed from the need to obtain an export licence to supply equipment to China. Now sources claim that Taiwan's TSMC, which has a state-of-the-art facility in China, has achieved similar favors.
Information on the release of TSMC from the new sanctions for a period of one year has been published by Nikkei Asian Review with reference to informed sources. TSMC is reported to be able to continue to equip its plant in Nanjing with 16-Nm production equipment. Although it is a parallel production site of 22-nm and 28-Nm products, the advanced process of technology for it is exactly 16-Nm, which is subject to new American export control requirements if transistors with spatial structure are used. TSMC is thus able to complete the modernization of its Chinese enterprise without the inevitable pauses required to obtain an export licence from the US Department of Commerce.
TSMC's loan last year was 10% dependent on China, while the previous year it was 17%, but leaving the Huawei Technologies arena as the world's largest smartphone manufacturer affected TSMC. In the second quarter of 2022, TSMC's revenue was 13% dependent on the Chinese market. It should be understood that TSMC's continued ability to upgrade its Chinese business was not a panacea, and the contract manufacturer's business would still suffer from American sanctions, as many Chinese clients would be forced to withdraw part or all of its services.
Bernstein analysts estimate that if sanctions restrict the supply to the PRC to supercomputer components only, the TSMC revenue will be reduced by only 0.5% next year. If restrictions apply to the entire server segment, losses could reach 5%. In any case, as TrendForce noted yesterday, for the Chinese server market, the existing US sanctions package will not be destructive.
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