The role of TSMC in America’s semiconductor strategy

The United States has revoked Taiwan Semiconductor Manufacturing Company’s licence that allowed fast track shipments of advanced chip making tools to its plant in Nanjing, China. Beginning December 31, 2025, the company will need to apply for individual approvals for every export of American made equipment to the facility. This decision marks a major step in Washington’s broader strategy to restrict China’s access to critical semiconductor technology.

Impact on TSMC and the chip industry

The removal of the licence means TSMC will no longer be able to rely on simplified approval procedures for its China based operations. Each shipment of equipment to Nanjing will now go through detailed checks that could result in delays or even outright refusals. For a company that depends on efficiency and predictable supply chains, this adds both cost and uncertainty.

Industry analysts believe this move will slow down any expansion or upgrade plans at the Nanjing plant. The requirement for case by case approvals makes it more difficult to plan long term investments and may reduce TSMC’s ability to meet demand in China. The decision also follows similar restrictions on Samsung and SK Hynix, showing a consistent tightening of US export rules across the semiconductor sector.

Reactions and strategic responses

TSMC confirmed that it has received notice of the licence withdrawal. The company reassured stakeholders that operations at its Nanjing facility will continue and that it is in contact with US regulators to ensure compliance. Despite the new challenges, TSMC emphasised that it will adapt its business strategy while maintaining supply commitments to its customers.

This development comes as the United States strengthens domestic semiconductor production. TSMC itself is investing heavily in advanced facilities in Arizona, which align with Washington’s goal of securing local chip manufacturing. By limiting China bound technology while expanding production at home, the US is reinforcing its position in the global technology race.

Geopolitical implications

The revocation of TSMC’s licence highlights the growing tension between the United States and China in the field of advanced technology. Washington aims to curb China’s progress in areas such as artificial intelligence and high performance computing, while Beijing continues to push for greater self sufficiency. For global markets, the decision signals ongoing volatility in semiconductor supply chains.

Investors and industry leaders will now watch closely to see how both TSMC and the Chinese market adapt. While the short term impact may be delays and higher costs, the long term outcome will depend on whether China accelerates its domestic chip making capabilities or seeks alternative sources of technology.

Outlook

The United States is making it clear that export control will remain a central tool in its technology policy. For TSMC, the challenge will be balancing compliance with American rules while maintaining a presence in China, the world’s largest semiconductor market. The coming years are likely to bring further changes as geopolitical competition intensifies and as the global chip industry adjusts to new realities.