U.S. officials have revoked Taiwan Semiconductor Manufacturing Co.’s authorization that allows it to ship essential equipment to its key chipmaking factory in China, potentially halting its ability to continue semiconductor production at the facility.

The Commerce Department’s Bureau of Industry and Security (BIS) notified Taiwan Semiconductor Manufacturing Co. (TSMC) on Sept. 2 that its validated end user (VEU) status for its chipmaking plant in Nanjing, China, will be terminated at the end of the year.

“TSMC has received notification from the U.S. Government that our VEU authorization for TSMC Nanjing will be revoked effective December 31, 2025,” TSMC told The Epoch Times in an emailed statement. “While we are evaluating the situation and taking appropriate measures, including communicating with the U.S. government, we remain fully committed to ensuring the uninterrupted operation of TSMC Nanjing.”

The Epoch Times has reached out to the BIS for comment.

The move follows an Aug. 29 announcement by the BIS that it is shutting down the Biden-era VEU program, which, since 2023, had allowed a handful of foreign chipmakers to export U.S.-origin goods and technology to China without licenses—an option never available to U.S. manufacturers. The agency described the VEU program as a “loophole” that unfairly disadvantaged U.S. chipmakers.

“The Trump Administration is committed to closing export control loopholes—particularly those that put U.S. companies at a competitive disadvantage,“ Jeffrey Kessler, undersecretary of commerce for industry and security, said in a statement. ”Today’s decision is an important step towards fulfilling this commitment.”

That decision was implemented on Sept. 2, when BIS revoked the VEU designations of Samsung, SK Hynix, and Intel’s Chinese fabrication plants, effective Dec. 31. After that date, the companies must seek licenses to keep their plants running but will likely be barred from expanding or upgrading them.

“Going forward, BIS intends to grant export license applications to allow former VEU participants to operate their existing fabs in China,” the agency said in a statement. “However, BIS does not intend to grant licenses to expand capacity or upgrade technology at fabs in China.”

TSMC’s presence in China is modest compared with the larger operations run by Samsung and SK Hynix, both South Korean companies.

In an earlier statement, SK Hynix told The Epoch Times that it would “maintain close communication with both the South Korean and U.S. governments and take necessary measures to minimize the impact” on its business.

Samsung did not respond to a request for comment by publication time.

South Korean officials said they were engaged in talks with the U.S. government on minimizing the fallout for Korean chipmakers, according to Seoul’s industry ministry, which told the U.S. Commerce Department that keeping its chipmakers running smoothly in China is vital for global supply chain stability.

The Chinese Commerce Ministry stated that it “opposes the U.S. move” and vowed to take “necessary measures” to protect its companies.

In June, when the Commerce Department first floated the idea of revoking the VEU waivers, a White House official described the move as a contingency in case U.S.–China trade talks soured. Beijing and Washington remain under a tariff truce that keeps Chinese exports to the United States at 30 percent and U.S. exports to China at 10 percent until November.

In July, Washington and Seoul announced a trade deal, although U.S. President Donald Trump and South Korean President Lee Jae-myung left their recent summit without signing it.

The administration’s latest move on export waivers comes against a backdrop of plans to take equity stakes in chipmakers that receive federal subsidies under the CHIPS and Science Act. Commerce Secretary Howard Lutnick said the government is seeking to convert portions of the multibillion-dollar grants awarded under the Biden administration into ownership positions, starting with Intel.

Trump administration officials say the proposal is part of a broader national security effort to onshore advanced semiconductor production and reduce reliance on Taiwan, which manufactures nearly all of the world’s most sophisticated chips. Treasury Secretary Scott Bessent said the goal is not to direct business toward any one company but to bolster U.S. capacity and ensure stability in critical supply chains.

Jacob Burg, Emel Akan, and Reuters contributed to this report.