In a significant development for the global semiconductor supply chain, Taiwan Semiconductor Manufacturing Company (TSMC) has received a key regulatory approval from the United States government. This move, following similar actions for South Korean giants, allows the world's leading chipmaker to maintain its operations in China under a new, more restrictive framework, highlighting the ongoing geopolitical tensions shaping the tech industry.
The Granting of the Annual Export License
The U.S. Department of Commerce has granted TSMC an annual export license, permitting the company to supply American-controlled chip manufacturing equipment to its fabrication plant in Nanjing, China, without requiring individual licenses for each shipment. This authorization, confirmed by TSMC in a statement on January 1, 2026, is designed to ensure the "uninterrupted" operation of the Nanjing facility and the steady delivery of its products. The license was issued ahead of the expiration of TSMC's previous "Validated End-User" (VEU) status on December 31, 2025, marking a transition from a broader exemption to a more controlled, yearly approval process.
Key Facility: TSMC's Nanjing factory produces semiconductors using mature process nodes, including 16nm technology. It contributed roughly 2.4% to the company's total revenue in 2024.
A Shift in U.S. Policy and Industry Impact
This decision represents a notable shift in U.S. export control policy. Under the previous administration, TSMC, along with Samsung and SK Hynix, enjoyed VEU status, which provided a blanket authorization for shipping equipment to their Chinese facilities. The Trump administration, viewing this as a loophole, revoked these indefinite licenses in late 2025, citing concerns over potential technology leakage. The new annual license system imposes a stricter review process, requiring companies to predict their equipment needs for the coming year and subjecting their operations to recurring scrutiny. Industry experts and the companies themselves have pointed out the practical challenges of this system, particularly the difficulty in forecasting which specific replacement parts might be needed for maintenance over a 12-month period.
Policy Timeline: The U.S. Trump administration revoked the indefinite "Validated End-User" (VEU) licenses for Samsung, SK Hynix, and TSMC in August and September 2025. The new annual license system was subsequently introduced to replace the VEU framework.
The Broader Context of Semiconductor Geopolitics
The licensing action for TSMC is part of a broader pattern of U.S. measures aimed at curbing China's advancement in advanced semiconductor manufacturing. By moving to an annual approval system for leading foreign chipmakers in China, the U.S. seeks to maintain tighter oversight over the flow of critical technology. The Chinese government has consistently opposed these measures, arguing that they disrupt the globally integrated semiconductor supply chain based on market principles. Chinese officials have urged the U.S. to correct its approach and have vowed to take necessary steps to protect the legitimate rights and interests of affected companies.
Chinese Government Stance: The Chinese Ministry of Commerce has stated that U.S. export control measures disrupt the global semiconductor supply chain and are opposed by China. It has called for the U.S. to correct its actions and has pledged to safeguard Chinese companies' rights.
Implications for TSMC's Operations and the Global Market
For TSMC, the license provides crucial operational certainty for its Nanjing plant, which manufactures chips on mature process nodes like 16-nanometer technology. In 2024, this facility contributed approximately 2.4% to TSMC's total revenue. The resolution avoids a potential disruption that could have affected global supplies of certain chips. However, the annual renewal requirement introduces a layer of bureaucratic and strategic uncertainty for long-term planning. The move aligns TSMC with its South Korean counterparts, Samsung and SK Hynix, who received similar annual licenses earlier, suggesting a new, standardized U.S. approach to managing advanced semiconductor manufacturing within China's borders.