US Approves TSMC Annual License for Chip Equipment Imports to China

The US government has granted an annual license to the Taiwan Semiconductor Manufacturing Company (TSMC) for the import of American chip manufacturing equipment to its facility in Nanjing, China. This approval, announced on January 1, 2024, is intended to ensure that TSMC’s operations remain uninterrupted and that product deliveries continue smoothly.

In a statement to Reuters, TSMC expressed confidence that the license would facilitate steady operations at the Nanjing plant, which specializes in producing 16-nanometre and other mature node chips. These products are not among TSMC’s most advanced semiconductors. The company also operates another chipmaking facility in Shanghai, China.

Previously, TSMC and other major Asian semiconductor firms, including Samsung Electronics and SK Hynix, benefited from exemptions from the US government’s extensive restrictions on chip-related exports to China. This status, known as validated end-user status, allowed these companies to operate without needing individual vendor licenses. However, this exemption expired on December 31, 2023, prompting the firms to seek new export licenses for 2026.

According to TSMC, the US Department of Commerce has now provided TSMC Nanjing with an annual export license. This license permits the supply of US export-controlled items to the Nanjing facility without requiring separate licenses for each vendor.

The Nanjing site is significant for TSMC, contributing approximately 2.4 percent of the company’s overall revenue, as noted in its 2024 annual report. The renewal of the license is crucial for maintaining the plant’s operational capacity and fulfilling delivery commitments amid ongoing international trade tensions and competition in the semiconductor sector.

As the global chip industry continues to evolve, TSMC’s ability to import necessary equipment remains vital for its competitiveness, particularly in the face of stringent export regulations aimed at controlling technological advancements in China. This development highlights the delicate balance of trade and technology in the semiconductor market, as companies strive to navigate complex international regulations while meeting growing demand for semiconductor products.