Taiwan considers TSMC export ban that would prevent manufacturing its newest chip nodes in U.S. — limit exports to two generations behind leading-edge nodes, could slow down U.S. expansion
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.
Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.
Considering all of TSMC’s largest customers want advanced nodes and US production, this would just be handing business over to Intel, especially with all the interest in 14a lately.
Considering all of TSMC’s largest customers want advanced nodes and US production, this would just be handing business over to Intel, especially with all the interest in 14a lately.
Funny, because Intel outsources to TSMC for over 40% of it's chips, so beggars can't be choosers. That's why nobody chooses Intel, they skip the unreliable middlemen and go to the source directly. TSMC has always kept the bulk of capacity at home, Arizona TSMC is a fraction of overall advanced node capacity, and sent back to Taiwan for packaging.
China also wants advanced nodes, but until the recent volt-face on H200, they weren't allowed to purchase through official channels.
Different countries/jurisdictions place different restrictions or tariffs on overseas sales, but people will sometimes try to get round these limits.
If you don't comply with legal restrictions applicable in your country, you face massive fines or sanctions, but perhaps you might turn a blind eye to businesses reselling your product to banned users, if the profits are big enough.
LoL that would be the stupidest thing for taiwan, the US the only reason china has not retaken Taiwan and it would most certainly be met with trump announcing that the us position on taiwan is that it will not come to its defence. It would be suicide. Even taking about it is enough to provoke trump he dont f$ck around hey
U.S. fab development is on par with TSMC and capacity will match before China development is on par with it. 2028 will be very interesting with U.S. and China going head to head. By then, I expect Taiwan will have been assimilated.
How does this work with Japan supposedly getting N2 fabs soon? Also, as stated above it seems like the US would tell Taiwan they are on their own if China pulls anything.
Funny, because Intel outsources to TSMC for over 40% of it's chips, so beggars can't be choosers. That's why nobody chooses Intel, they skip the unreliable middlemen and go to the source directly. TSMC has always kept the bulk of capacity at home, Arizona TSMC is a fraction of overall advanced node capacity, and sent back to Taiwan for packaging.
Heck, Nvidia video cards are final assembly in China aren't they? The chips get packaged in Taiwan and then sent to OEM factories in mostly China to be made into video cards or AI accelerator cards.
Yeah I suspect whatever comes out will have an exception for the USA. Maybe author doesn't realize that Taiwan really likes all those Raytheon, General Dynamics and Northrop Grumman giftcards they get for the Holiday.
