Taiwan has prohibited Taiwan Semiconductor Manufacturing Co. (TSMC) from producing its advanced 2nm chips outside its borders, signaling the government's determination to protect critical semiconductor technology amid growing geopolitical tensions. Taiwan's Minister of Economic Affairs, J.W. Kuo, confirmed the move, emphasizing that while TSMC is free to build advanced facilities abroad, its most cutting-edge process nodes must remain within Taiwan.
"Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2nm chips overseas currently," Kuo stated at a legislative Economics Committee meeting in Taipei. "Although TSMC plans to make 2nm chips [abroad] in the future, its core technology will stay in Taiwan." The restrictions underscore Taiwan's commitment to maintaining its leadership in the global semiconductor sector and preventing potential foreign influence or control over its most advanced technologies.
The announcement casts uncertainty on TSMC's ambitious overseas expansion, particularly in the United States. The company's first Arizona plant, set to begin production of 4nm chips next month, is part of a broader effort to bolster U.S.-based semiconductor manufacturing. TSMC's plans include a second Arizona phase, expected to produce 3nm and 2nm chips by 2028. However, Taiwan's regulations mandate that chipmakers only produce older-generation nodes at foreign facilities, potentially complicating these plans.
The decision comes amid shifting U.S.-Taiwan relations. While the Biden administration's CHIPS Act has encouraged TSMC's investments in the U.S., former President Donald Trump's potential return to office has added new uncertainty. Trump has previously voiced skepticism about foreign firms benefiting from U.S. incentives, raising concerns about potential changes to the CHIPS Act and the broader U.S.-Taiwan semiconductor collaboration.
Despite these challenges, industry leaders have sought to reassure stakeholders. Cliff Hou, chairman of the Taiwan Semiconductor Industry Association (TSIA) and a senior vice president at TSMC, highlighted the strength of the U.S.-Taiwan partnership. "The bilateral relationship has not changed because of the political landscape changes in the U.S.," Hou said at a forum in Hsinchu. He acknowledged that adjustments may be necessary but emphasized that the core collaboration between the two nations remains robust.
Taiwan's decision to keep its most advanced technologies within its borders reflects the strategic importance of semiconductors on the global stage. As the world's largest contract chipmaker, TSMC plays a crucial role in supplying cutting-edge semiconductors to major U.S. technology companies, solidifying Taiwan's position as a global semiconductor leader. By restricting overseas production of its 2nm chips, Taiwan aims to protect its technological edge and safeguard its economic and strategic interests.
Kuo's remarks come amid heightened concerns over potential technology transfers. Taiwan's regulations are specifically designed to ensure that its leading-edge semiconductor capabilities remain under domestic control. "These regulations are meant to ensure that Taiwan, in general, and TSMC, in particular, remains a key business hub for the world's leading chip designers," Kuo explained.
In response to the evolving geopolitical landscape, the TSIA and Taiwan's government are working to attract foreign partners to establish design and materials centers within Taiwan. This initiative seeks to bolster the island's semiconductor ecosystem and reduce dependence on foreign equipment and materials, areas traditionally dominated by international firms.
