US Grants TSMC Annual License for Chip Equipment Imports to China

The United States government has granted an annual license to the Taiwan Semiconductor Manufacturing Company (TSMC), allowing the import of US chip manufacturing equipment to its facility in Nanjing, China. This pivotal approval, announced on January 1, 2024, ensures the continuity of operations and product deliveries at TSMC’s Nanjing plant, which produces 16-nanometre chips and other mature node semiconductors.

TSMC’s license follows similar approvals for South Korea’s Samsung Electronics and SK Hynix, both of which have also received licenses to import essential chipmaking tools. These companies had previously enjoyed exemptions from stringent US export restrictions targeting technology exports to China. However, this status, known as validated end-user status, expired on December 31, 2023, prompting the need for renewed export licenses to maintain operations through 2026.

According to TSMC, the annual export license from the US Department of Commerce allows the company to receive export-controlled items without requiring individual vendor licenses for each transaction. This streamlined process is crucial for maintaining the efficiency of TSMC’s manufacturing operations, ensuring that the facility can continue to meet its production targets.

The Nanjing plant plays a significant role in TSMC’s overall revenue, contributing approximately 2.4 percent in the company’s 2024 annual report. While the facility does not manufacture TSMC’s most advanced semiconductors, it remains an important part of the company’s global supply chain. In addition to the Nanjing site, TSMC also operates a chipmaking facility in Shanghai.

The issuance of these licenses reflects ongoing efforts by the US government to balance national security concerns with the realities of global supply chains in the semiconductor industry. As competition in technology escalates, maintaining access to critical manufacturing tools remains a priority for both US and Asian semiconductor companies.

In light of these developments, companies like TSMC, Samsung, and SK Hynix are positioned to continue their operations in China, even as they navigate the complexities of US-China relations and evolving trade policies. As the semiconductor landscape shifts, the implications of these licensing agreements will be closely monitored by industry stakeholders and government officials alike.