Taiwan’s strict technology protection rules have thrown a wrench into TSMC’s plans to manufacture its most advanced 2nm chips overseas. The Taiwanese government’s stance, clearly articulated by Minister of Economic Affairs J.W. Kuo, is to prioritize keeping cutting-edge technology within its borders. While TSMC aims to produce 2nm chips abroad in the future, Kuo insists that the company’s core technology will remain firmly rooted in Taiwan.
This decision stems from Taiwan’s legislation, which restricts domestic chipmakers from producing chips overseas that are less than one generation behind the most advanced nodes manufactured in their home fabs. This means that while TSMC can build fabs abroad and produce chips, these facilities will not be able to utilize the very latest technology.
TSMC’s ambitious global expansion plans have been impacted by these regulations. The company had envisioned manufacturing 2nm and more advanced chips in its Arizona fab by 2030. This facility is expected to become operational in 2028, initially using 3nm and 2nm process nodes. However, the current restrictions mean that only older technology can be used in this US-based fab.
The Taiwan Semiconductor Industry Association (TSIA) chairman, Cliff Hou, who also serves as TSMC’s senior vice president, acknowledged that the US presidential elections might influence the details of the partnership between Taiwan and the US. However, he reassured that the long-standing bilateral relationship remains strong and unaffected by the political landscape changes.
Despite the challenges posed by these regulations, TSMC remains committed to its global expansion plans. The company’s commitment to its Arizona fab, expected to begin production of 4nm chips in December 2024, highlights its continued investment in overseas markets. However, the limitations imposed by Taiwan’s technology protection policies will inevitably shape the future of TSMC’s global footprint.
The tension between safeguarding Taiwan’s technological leadership and the global ambitions of TSMC highlights the complex geopolitical landscape surrounding the semiconductor industry. As the world becomes increasingly reliant on advanced chips, the location of their production is becoming a crucial strategic factor. The outcome of this tug-of-war will have significant implications for the global semiconductor market, potentially influencing the balance of power in technology and innovation.
