TSMC Faces U.S. ITC Patent Investigation Threatening AI Chip Imports

Global semiconductor foundry leader Taiwan Semiconductor Manufacturing Company (TSMC) is confronting a significant patent infringement investigation launched by the U.S. International Trade Commission (ITC) that threatens the import of its most advanced AI accelerator chips into the United States. The investigation centers on allegations that TSMC’s cutting-edge manufacturing processes infringe patents held by two patent licensing companies based in Dublin, Ireland: Longitude Licensing and Marlin Semiconductor.

The complaint, filed in early 2025, claims that TSMC’s AI chips violate patents critical to AI accelerator technology. Notably, some of the patents asserted by Marlin Semiconductor were acquired from Taiwanese wafer foundry United Microelectronics Corporation (UMC) in 2021, highlighting a complex connection within Taiwan’s semiconductor ecosystem.

Both Longitude Licensing and Marlin Semiconductor operate as Non-Practicing Entities (NPEs) under IPValue Management, whose parent company is Vector Capital, a private equity fund based in San Francisco. These entities specialize in patent licensing and enforcement rather than producing their own products, suggesting that TSMC may not have direct commercial counterparts in the litigation.

The ITC initiated a Section 337 investigation in March 2025. According to the procedural timeline, an administrative law judge is expected to issue an initial determination by June 2026, with the ITC Commission’s final ruling anticipated in October 2026. The potential outcome includes an exclusion order that could bar the import of infringing chips into the U.S., a sanction that may extend beyond TSMC to affect major American AI chip designers and cloud service providers reliant on TSMC’s advanced manufacturing capabilities.

The case has sparked a sharp partisan divide in the U.S. Congress regarding the balance between patent enforcement and semiconductor supply chain security. Four Republican lawmakers—Representative Ryan Zinke (Montana), Senators Tim Sheehy and Roger Marshall (Kansas), and Senator Bernie Moreno (Ohio)—sent a letter to ITC Chair Amy Karpel in May 2025 urging strict enforcement of patent rights. They emphasized that TSMC should not receive special treatment despite its strategic role in the U.S. AI and semiconductor supply chain, warning that leniency could undermine the competitiveness of domestic American companies.

Conversely, Democratic lawmakers from Arizona, including Senators Ruben Gallego and Mark Kelly and Representative Greg Stanton, cautioned the ITC against imposing sanctions that could jeopardize U.S. semiconductor manufacturing, AI development, defense capabilities, and Arizona’s economy. TSMC’s commitment to invest approximately USD 165 billion (around NT$5.2 trillion) in Arizona underscores its integral role in the U.S. semiconductor strategy. Approximately 75% of TSMC’s revenue last year was generated from the North American market.

Taiwan’s Ministry of Economic Affairs (MOEA) responded swiftly, affirming that Taiwanese semiconductor companies uphold intellectual property rights and operate in compliance with international laws and regulations. The MOEA characterized the dispute as a patent matter under U.S. legal review and pledged to monitor developments closely, maintain communication with relevant companies, and provide assistance to safeguard Taiwan’s semiconductor industry stability and supply chain resilience.

TSMC itself stated that it complies with applicable laws and regulations in all jurisdictions where it operates but refrained from detailed commentary on the litigation.

Industry analysts observe that this case exemplifies how competition in the AI chip sector now extends beyond manufacturing technology and capacity to include patent portfolios, import restrictions, and geopolitical considerations. The U.S. government’s handling of this investigation will be a critical indicator of future U.S.-Taiwan semiconductor collaboration and the broader balance between intellectual property enforcement and national strategic interests in the AI era.