Taiwan Semiconductor Manufacturing Company (TSMC) has reportedly implemented new shipment restrictions on Chinese IC design firms amid intensifying US-China trade tensions. Effective January 31, 2025, products using 16/14nm and below technologies must be packaged by a US Bureau of Industry and Security (BIS)-certified third-party OSAT (Outsourced Semiconductor Assembly and Test) provider. Furthermore, TSMC requires an official certification copy from the approved packaging firm before proceeding with shipments, with deliveries halted if documentation is not provided.
According to ijiwei, numerous senior executives at affected Chinese IC design companies have confirmed this directive. Companies with certified packaging partners will experience minimal disruption, while those without US-approved providers face severe shipment delays and potential operational setbacks.
Mounting pressure on Chinese chipmakers
Industry sources indicate that some Chinese IC design firms must now fully outsource key orders, including tape-out, fabrication, packaging, and testing, while facing strict limitations on direct involvement in the production process. These measures pose substantial challenges, restricting operational control and adding complexity to supply chain logistics.
In early November 2024, amid tightening US regulations on China's semiconductor industry, Washington reportedly requested TSMC to suspend shipments of all 7nm and more advanced chips to Chinese AI and GPU clients. The US introduced new export control regulations in January 2025, and TSMC's recent policy changes appear to be in direct response to these measures.
The suspension of shipments carries significant implications for China's IC design firms and the broader semiconductor industry. In the short term, production schedules will be disrupted, delivery timelines extended, and affected companies may struggle to retain customers, weakening their competitive standing in the global market. Additionally, firms will be forced to dedicate more time and resources to securing alternative packaging solutions and restructuring their supply chains.
Catalyst for domestic development
While these restrictions present immediate challenges, they could also accelerate China's push for semiconductor self-sufficiency. Domestic wafer fabs and OSAT providers stand to benefit as demand for localized alternatives grows. Simultaneously, Chinese IC design firms are likely to intensify R&D efforts to develop more advanced chip architectures, reducing reliance on foreign foundries and packaging services.