According to Nikkei, citing sources, TSMC is removing Chinese chipmaking equipment from its leading-edge 2nm fabs to guard against potential U.S. restrictions that could disrupt production. As the report notes, sources said the decision was influenced by the prospect of a U.S. regulation that would bar chipmakers receiving American funding from using Chinese manufacturing tools.

The report adds that U.S. lawmakers, led by Sen. Mark Kelly, have proposed the Chip EQUIP Act, which would prohibit recipients of federal subsidies and tax credits from purchasing equipment from “foreign entities of concern,” a label the industry understands to include Chinese suppliers.

As the report points out, Chinese equipment used by TSMC’s earlier advanced chip production lines included etching tools from Advanced Micro-Fabrication Equipment Inc. China (AMEC), one of the country’s leading chip tool makers, as well as systems from Mattson Technology, a former U.S. company acquired by Beijing E-Town Semiconductor Technology in 2016.

In the meantime, TSMC is also reviewing all the chipmaking materials and chemicals it uses, aiming to reduce reliance on Chinese supplies in its Taiwan and U.S. operations, according to Nikkei, citing sources.

China’s Semiconductor Equipment Push: Progress and Gaps

According to TrendForce, as China has become the world’s largest semiconductor equipment market, the ongoing expansion of domestic wafer and packaging capacity is fueling strong demand and accelerating the growth of homegrown equipment under the theme of “import substitution and domestic breakthroughs.”

TrendForce points out that China’s semiconductor equipment industry has made progress in areas such as etching, thin-film deposition, and cleaning tools, but it remains well behind global leaders in advanced technologies like lithography, high-end metrology and inspection, and ion implantation. In certain segments, the localization rate of Chinese equipment is still below 10%.

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(Photo credit: TSMC)