TSMC Cleared to Send Chip Equipment to China amid U.S. Export Controls

Contract chipmaker Taiwan Semiconductor Manufacturing (TSMC) (TSM) has secured a new one-year license mandated by the U.S. government for the export of U.S.-made chipmaking tools into China.Claim 70% Off TipRanks This Holiday SeasonUnlock hedge fund-level data and powerful investing tools for smarter, sharper decisions Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential Why Is This Approval Important? The approval is crucial for TSMC, the world's largest chip foundry, to continue producing high-performance chips needed to meet the growing demand for data center capacity, especially among Big Tech hyperscalers. The permit will enable the company to import the U.S. chipmaking tools required to keep its facilities in Nanjing, China, active. Previously, U.S. authorities exempted TSMC from its restrictions on chip-related exports to China. However, President Donald Trump's administration has ramped up efforts to limit China's technological advancement, especially in the highly innovative artificial intelligence chip sector, and has been seeking to expand U.S. domestic production. The American government exemption on such exports expired on December 31. South Korean chipmakers Samsung Electronics (SSNLF) and SK Hynix — two key players in the global memory-chip production industry — have also obtained the new license that permits them to ship U.S.-made chipmaking equipment to their factories in China through 2026. U.S. Chipmakers Lean on Overseas Production TSMC's plant in Nanjing makes 16-nanometer chips and other critical node chips. However, these are not the firm's most advanced semiconductor manufacturing processes and designs. This week, TSMC kicked off the mass production of more powerful and energy-efficient 2-nanometer chips across its factories in Baoshan and Hsinchu, Taiwan. American technology firms continue to depend heavily on foreign-made chips—particularly those produced in Taiwan—even after the 2022 CHIPS and Science Act earmarked billions of dollars in subsidies for domestic production. For instance, U.S. chip heavyweight Nvidia (NVDA) is reportedly looking to place new orders for its H200 AI chips with TSMC amid surging demand in China. In addition, the California-based chipmaker is currently locked in a battle with consumer electronics giant Apple (AAPL) for TSMC's advanced chipmaking nodes. Is TSM a Buy, Sell, or Hold? On Wall Street, TSMC's shares continue to attract a Strong Buy consensus rating, as seen on TipRanks. This is based on six Buys and one Hold rating assigned by analysts over the past three months. Moreover, the average TSM price target of $358 implies about 18% upside from current trading levels.