TSMC ‘cannot produce 2nm chips overseas’ until domestic output becomes more advanced, confirms Taiwanese govt official

While TSMC can build advanced fabs in the U.S., Europe, and Japan, it cannot transfer its most advanced process technologies to production facilities abroad, as they are protected by Taiwanese law, said J.W. Kuo, Minister of Economic Affairs in Taiwan, reports the Taipei Times. That said, TSMC cannot make chips using its N2 (2nm-class) manufacturing technologies in the U.S. while these production nodes are its latest nodes.

“Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2nm chips overseas currently,” Kuo said at a meeting of the Economics Committee in Taipei, reports Taipei Times. “Although TSMC plans to make 2nm chips [abroad] in the future, its core technology will stay in Taiwan.”

Taiwanese regulations require domestic chipmakers to manufacture only chips using previous-generation fabrication processes at their overseas facilities, keeping the most advanced technology within the country.

Perhaps, the Minister is a bit too cautious, as TSMC’s 2nm-class capable production facility in the U.S. is many years away. Yet, the message he sends is quite clear: Taiwan wants TSMC to keep its leading-edge process technology in the country. While this is not said directly, 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 that require leading-edge process technologies, and which all happen to be from the U.S.

TSMC is set to start high-volume production of chips on its N4 and N5 fabrication technologies (4nm and 5nm-class) at its Fab 21 in Arizona in 2025. The company’s first N3 and potentially N2-capable facility — Fab 21 phase 2 — is only set to come online in 2028, which is when TSMC’s facilities in Taiwan will produce chips on the company’s A16, A14, and finer nodes.

But, the U.S. does not have to worry. At a forum in Hsinchu, Cliff Hou, chairman of the Taiwan Semiconductor Industry Association (TSIA) and a senior vice president at TSMC, assured that the long-standing collaboration between Taiwan and the U.S. would not be disrupted by political changes. Although certain adjustments may be needed, the core partnership remains stable and enduring, as it has been for decades.

Addressing potential U.S. tariff hikes, a topic Trump raised in his campaign, Hou noted that TSIA has yet to receive official notifications. However, he urged Taiwan to allocate more resources to R&D and strengthen its supply chain expertise to secure its leadership position in the global semiconductor market.

Hou also pointed to the importance of Taiwan advancing its expertise in semiconductor equipment and materials — areas where foreign companies currently dominate. Collaborative efforts are underway between the industry and government to attract foreign partners to establish design and materials centers within Taiwan, bolstering its semiconductor ecosystem, which is another way to bolster Taiwan’s importance in the global microelectronics supply chain.