The US has quietly extended critical support to TSMC’s China operations, granting the chipmaking giant an annual licence to import American semiconductor equipment into the country, reports Reuters. Issued by the US Department of Commerce, the approval allows TSMC to continue supplying its Nanjing fab with US-origin tools without filing separate export requests for each shipment.
The decision comes as the Trump-led US government continues to tighten controls on the flow of advanced semiconductor technology into China, as part of a broader effort to limit Beijing’s access to high-end computing capabilities. Rather than offering a permanent exemption, the US has moved toward time-limited approvals, giving regulators the ability to reassess permissions regularly. Therefore, for TSMC, the annual licence provides operational certainty while still keeping its China activities under close scrutiny.
However, the timing of the development becomes critical as, last week, China reportedly mandated that chipmakers building new factories or expanding existing ones source at least 50% of their manufacturing equipment from domestic suppliers to secure regulatory approval. At the same time, Beijing also launched three state-backed venture capital funds worth more than 150 billion yuan (~ $21 billion), with a clear shift toward so-called ‘hard technology’ sectors, which include semiconductors, quantum computing, aerospace, biomedicine, brain-computer interfaces and advanced manufacturing.
Notably, TSMC’s Nanjing facility is focused on producing chips using mature manufacturing processes, including 16-nanometre technology and older nodes. These chips are not used for cutting-edge artificial intelligence and advanced military applications but are essential components in automobiles, industrial equipment, consumer electronics and networking hardware. Although the Nanjing plant contributes only a small portion of TSMC’s overall revenue, it plays a strategic role in serving customers that rely on stable supplies of so-called legacy chips. It is also worth noting that similar annual approvals have been granted to other major chipmakers with manufacturing footprints in China, including South Korea’s Samsung Electronics and SK Hynix.
The newly introduced licence replaces a previous arrangement under which TSMC and other foreign chipmakers operating in China benefited from broad authorisations to receive US equipment. That framework expired at the end of 2025, forcing companies to seek new approvals. And now, by shifting to an annual licensing model, the US government gains more direct oversight while avoiding sudden disruptions that could affect global supply chains. Most importantly, the approval does not permit TSMC to expand advanced manufacturing in China. Restrictions remain firmly in place on the most sophisticated chipmaking tools, including leading-edge lithography systems and equipment used for the latest logic and memory chips.
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