The United States has approved TSMC to export to China—under an annual licensing scheme—chip manufacturing equipment that incorporates American technology. This move suggests a shift in approach: less regulatory “free rein,” but also fewer shocks for the industry. The decision follows similar reports concerning Samsung Electronics and SK Hynix, and aligns with a strategy aimed at balancing two opposing forces: restraining the transfer of advanced capabilities to China without causing an immediate shock to the global supply of semiconductors and related components.
What exactly has been approved (and why does it matter)
According to reports, the U.S. Department of Commerce (DOC) has authorized TSMC to export certain manufacturing equipment with American technology to China “annually”. The nuance is key: this is not a permanent exemption, but a permission that is renewed and, therefore, maintains political and administrative control over the flow of critical tools.
In TSMC’s case, the focus is on its plant in Nanjing, which produces chips on mature (non-leading) nodes. While it represents a relatively small part of the company’s business, it is relevant for sectors requiring high volume, stability, and low costs. Reports mention that this operation accounts for around 2.4% of TSMC’s revenue.
From “special” exemption to annual license: the regulatory shift
This step is better understood in context: in August 2025, the Office of Industry and Security (BIS)—part of the DOC—announced the closing of a “gap” that allowed certain plants in China access to U.S. equipment under more flexible conditions. BIS explained that affected companies would need to apply for licenses to receive certain export-controlled items, but also indicated its intention to approve licenses that would permit existing facilities to continue operating, without necessarily enabling capacity or technology jumps.
In other words: Washington does not want to “shut down” factories abruptly (with associated global collateral damage), but aims to raise the bar on controls and have more direct intervention capacity.
A recurring pattern: Samsung and SK Hynix, also within the new framework
The approval for TSMC follows reports that the U.S. has also granted annual licenses to Samsung and SK Hynix to export equipment to their operations in China. This reinforces the idea that the U.S. administration is opting for a model of “conditioned continuity”: allowing maintenance and operation (especially on non-leading nodes), but under periodic oversight.
Quick comparison: what changes with the new approach
| Aspect | Before (more flexible model) | Now (annual license) |
|---|---|---|
| Type of authorization | Exemption/special status for certain flows | Limited-term license (renewable) |
| Political control | Less friction once status is granted | Greater capacity to review, condition, or deny renewal |
| Risk of disruption | Low… until regulations change | More predictable in the short term, but with periodic review |
| Market signal | “Operate normally” | “Operate, but under surveillance” |
(The scheme is based on BIS communications regarding the regulatory regime change and reports on annual licenses.)
Is this a relaxation or a tightening?
It depends on your perspective.
- For the industry, it’s reassuring because it reduces the likelihood of a sudden “cut” affecting maintenance, spare parts, and operational continuity.
- For the technology control policy, it’s effectively a tightening: switching to revisable licenses means more levers to limit, condition, or redirect access to sensitive tools.
This does not occur in a vacuum. U.S. strategy regarding semiconductors and China has relied increasingly on complex export controls, especially targeting advanced chips and the equipment necessary to produce them.
What might this mean for 2026
- More bureaucracy, but less extreme uncertainty: an annual license isn’t “free,” but it prevents the scenario of shutdowns due to lack of permits.
- Increased pressure on China’s industrial planning: if continuity depends on renewals, plants are more exposed to geopolitical shifts.
- A message to the entire ecosystem: the supply chain can keep functioning, but with a clear rule: every relevant step will be monitored.
The key question remains how limits will be interpreted: which equipment categories are affected, under what conditions, how usage will be audited, and whether the framework will remain stable or tighten further as the technological tug-of-war between Washington and Beijing evolves.
Frequently Asked Questions
What is an “annual export license” in this context?
A permit that authorizes the export of certain controlled goods (e.g., equipment with U.S. technology) for a limited period—usually a year—subject to renewal and conditions.
Does this allow TSMC to expand advanced capacity in China?
The announcements and regulatory framework aim to keep existing facilities operational under control, not to facilitate jumps to cutting-edge technologies. The specifics depend on the conditions of each license.
Why doesn’t the U.S. block everything outright?
Because a total cutoff could cause global side effects (supply issues, price hikes, impact on electronics industry). The approach seeks to limit strategic capabilities without breaking the supply chain all at once.
Does this impact chip prices or availability in Europe?
Indirectly, it could affect the stability of supply for mature nodes (automotive, industry, consumer electronics). In the short term, the license model aims precisely to avoid abrupt disruptions.
via: Digitimes