TSMC Stock Climbs on US Export License for China Plant
Annual approval for its Nanjing facility removes immediate operational uncertainty but signals a new era of regulatory scrutiny amid US-China tech tensions.
Shares in Taiwan Semiconductor Manufacturing Company (TSM) rose on Tuesday after the chip-making giant secured a crucial one-year export license from the United States, allowing it to continue supplying its factory in Nanjing, China, with American equipment.
The company’s stock climbed 1.44% in morning trading as investors reacted to the news, which removes a significant point of geopolitical and operational uncertainty for the world's largest contract chipmaker. The license, granted by the U.S. Department of Commerce, ensures the Nanjing facility can maintain its production of mature-node chips without interruption.
This approval resolves immediate concerns that stemmed from the expiration of a previous arrangement. Until the end of 2025, TSMC and other foreign chipmakers operated under a more stable "validated end-user" status. However, as reported by the South China Morning Post, the U.S. has shifted its policy, moving TSMC, along with South Korean peers Samsung and SK Hynix, to a framework that requires annual renewals.
The Nanjing plant, while a vital part of TSMC’s global manufacturing footprint, is not on the cutting edge of semiconductor technology. It focuses on producing 16-nanometer and other mature-node chips, which are essential for the automotive and consumer electronics industries but fall outside the scope of Washington's most stringent restrictions aimed at curbing China's access to advanced artificial intelligence and military-grade semiconductors.
According to company disclosures, the Nanjing facility accounted for approximately 2.4% of TSMC's total revenue in 2024. While a relatively small portion of its overall business, a disruption at the plant would have posed a significant challenge to specific customer supply chains.
While the market has welcomed the immediate clarity, some analysts note that the transition to an annual license introduces a new dynamic. The need for yearly approval creates what some call a state of 'regulatory volatility,' replacing long-term certainty with a recurring cycle of evaluation dependent on the shifting tides of US-China relations.
"This prevents potential supply chain disruptions and ensures product deliveries from the plant for now," one analyst noted. "But it also signifies that the era of indefinite waivers is over, placing these facilities under a tighter, more politically sensitive review process."
The decision underscores the complex balancing act for both multinational companies and the U.S. government. Washington aims to handicap Beijing's advanced technological ambitions without completely severing supply chains for legacy semiconductors that are integral to the global economy. For TSMC, the license provides breathing room as it aggressively diversifies its manufacturing base beyond Taiwan. The company is in the process of building multi-billion dollar fabrication plants in Arizona, USA, and Kumamoto, Japan, with another major project planned in Germany, a long-term strategy designed to mitigate the risks of geopolitical concentration.
Investors will be watching closely to see how this new licensing regime unfolds over the coming years and what it signals for the future of global technology manufacturing.