Being concerned that TSMC’s expansion into the United States could dilute Taiwan’s semiconductor leadership, Taiwanese authorities are mulling setting a new export rule that would only let the world’s number-one foundry export technologies that are two generations behind its leading-edge production node, reports CNA. If this happens, this could slow down TSMC’s expansion in the U.S., as it currently relies on aggressive building of advanced fabs there.
The core of this new export policy is the government’s N-2 rule, which permits offshore deployment only of process technologies that trail Taiwan’s leading-edge by two generations. Previously, Taiwanese authorities stuck to their N-1 rule, allowing TSMC to export all technologies that are at least one generation behind the leading-edge fabrication process. The new framework is much stricter; depending on how one counts generations, it means that TSMC may only be allowed to export nodes that are two or even four years behind its best technology.
Under this approach, if TSMC were to develop a 1.2nm or 1.4nm-class fabrication process domestically, then only its 1.6nm-class production would be eligible for use abroad, according to Lin Fa-cheng, Deputy Minister of the National Science and Technology Council (NSTC).
For now, TSMC's Fab 21 phase 1 in Arizona is capable of making chips on N4/N5 fabrication technologies (which belong to the same generation). Domestically, TSMC has several fully ramped fabs capable of 3nm-class manufacturing processes (N3B, N3E, N3P, etc.) and is about to begin high-volume production of chips on its N2 production nodes, which belong to its 2nm-class. Formally, TSMC's Fab 21 phase 1 already complies with the N-2 rule. However, once TSMC begins to make chips on 3nm-class technologies at Fab 21 phase 2 in 2027, the facility will not be compliant with the N2-2 rule because N3 is formally just one generation behind N2/N2P/A16. Yet, while A16 is N2P with a backside power delivery network, if one considers A16 an all-new generation, then Fab 21 phase 2 will comply with the new high-tech export framework.
Lin also emphasized that most of TSMC's research and development workforce remains in Taiwan and noted that the company's R&D footprint aligns with government requirements. In practice, this concentration of engineers and scientists ensures that future process development stays anchored domestically, even as the company builds manufacturing capacity and R&D centers overseas. Lin also emphasized that all qualified personnel employed in the semiconductor industry are subject to regulatory oversight, which extends protection of IP and hardware to human capital.
In addition, any future U.S. investments by TSMC will be examined under existing laws, and projects exceeding certain thresholds must be reviewed by the MOEA’s Investment Commission, said Chou Yu-hsin, Deputy Director-General of the Industrial Development Administration under the MOEA.
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