TSMC Nanjing Plant Unlimited Exemption: A Stinger into China's Chip Industry? Don't talk nonsense anymore

1、 TSMC Nanjing Plant has been granted an indefinite exemption, allowing it to expand production in mainland China?
Firstly, there is a serious factual error in the first paragraph of this "heroic essay" by Da V.
The big V said, "TSMC Nanjing has obtained an indefinite exemption from the U.S. Department of Commerce, which means that the United States will no longer restrict TSMC to develop the chip industry in Chinese Mainland while subsidizing TSMC. TSMC can expand its production in Chinese Mainland without applying for permission from the U.S. Department of Commerce."
The reality is that TSMC cannot continue to expand its production in Chinese Mainland after it has received subsidies from the United States for building factories in the United States. Similarly, TSMC's Nanjing plant has been granted an indefinite exemption, which does not include new production expansion.
(TSMC's $65 billion investment in the United States has already received a promised $6.6 billion subsidy from the United States.)
1. Limitations on the Barrier Rules of the US Chip Act
In September 2023, the United States announced the "guardrail" rules of the Chip and Science Act as follows:
a、 It is prohibited for recipients of the Chip Act incentive funds to use the funds to build, modify, or improve semiconductor facilities outside the United States.
b、 The recipients of the incentive funds of the "Chip Act" are restricted to invest in most semiconductor manufacturing industries in foreign countries (including Chinese Mainland) of concern within 10 years from the date of award.
This regulation prohibits substantial expansion of semiconductor manufacturing capabilities in cutting-edge and advanced facilities in relevant countries within 10 years from the date of grant. The final rule links the expansion of semiconductor manufacturing capacity with the increase of cleanrooms or other physical spaces, and defines material expansion as increasing facility production capacity by more than 5%.
This threshold aims to capture moderate transactions that expand manufacturing capacity, but allows fund recipients to maintain their existing facilities through normal business process equipment upgrades and efficiency improvements.
At the same time, this rule is also limited to the expansion and construction of mature processes in foreign countries of concern. Prohibit recipients of subsidies from adding new clean room spaces or production lines, resulting in an expansion of facility production capacity by more than 10%.
c、 Restricting recipients of incentive funds under the Chip Act from participating in certain joint research or technology licensing work with foreign entities involved in technology or products that raise national security concerns.
If these barriers are violated, the US Department of Commerce can recover all federal financial aid.
Obviously, if TSMC, which has been subsidized by the United States, wants to continue to expand production in Chinese Mainland in the next 10 years, even if the new capacity is expanded, the mature process can only be controlled within 10%. However, the capacity growth through optimization and upgrading of existing production lines should not be within this limit.
2. TSMC Nanjing Plant's indefinite exemption does not mean it can expand production
As early as October 7, 2022, the United States introduced a new semiconductor export control policy to China, which limits the ability of wafer manufacturers located in Chinese Mainland to obtain advanced semiconductor manufacturing equipment in the United States (advanced logic manufacturing equipment below 16/14nm, DRAM at 18nm and below, 3D NAND manufacturing equipment at 128 layers and above), unless approved by the U.S. Department of Commerce. This includes three aspects