The massive image: Taiwan is transferring to strengthen its grip on superior semiconductor expertise and abroad investments, signaling a major shift in how the nation manages its vital chip trade. Lawmakers have handed amendments to the Industrial Innovation Act, introducing strict new controls over the export of cutting-edge course of applied sciences and outbound investments by semiconductor corporations, most notably TSMC.
On the coronary heart of the brand new measures is the so-called “N-1” rule, which prohibits corporations from exporting their most superior semiconductor manufacturing expertise. As a substitute, solely expertise no less than one technology behind what is obtainable domestically may be deployed in abroad services.
Premier Cho Jung-tai confirmed this coverage, which is able to straight have an effect on TSMC’s deliberate growth in america and make sure that the corporate’s newest improvements stay inside Taiwan’s borders.
Beforehand, Taiwan’s rules didn’t explicitly prohibit the export of superior semiconductor manufacturing processes. The brand new guidelines, enshrined in Article 22 of the amended Industrial Innovation Act, are anticipated to return into power by the top of 2025.
The federal government’s intent is obvious: to take care of Taiwan’s technological edge and safeguard nationwide safety within the face of rising geopolitical tensions and international competitors within the semiconductor sector.
TSMC at present leads the trade with its N3P course of node, however it plans to start producing chips utilizing its next-generation N2 course of by the top of this 12 months. Looking forward to late 2026 and past, the corporate expects two flagship nodes: N2P, designed for consumer functions, and A16, which options superior energy supply for high-performance computing.
Nevertheless, it’s nonetheless unclear which nodes might be labeled as “flagship” and thus topic to export restrictions, or if the federal government will impose simultaneous bans on a number of nodes when even newer applied sciences are launched.
The amendments additionally empower authorities to reject or revoke abroad investments in the event that they threaten nationwide safety, hurt financial growth, violate worldwide agreements, or end in unresolved labor disputes. The legislation now formalizes these restrictions, elevating them from sub-regulations to statutory legislation and introducing specific penalties for non-compliance.
Below the revised guidelines, corporations investing overseas with out prior approval might face fines starting from NT$50,000 to NT$1 million (as much as about $30,800). Repeat or severe violations, similar to failing to handle dangers to nationwide safety or financial growth after approval, might end in fines of as much as NT$10 million (about $308,000).
Whereas these penalties are important, they’re unlikely to discourage main gamers like TSMC, which has introduced plans to speculate $165 billion in its US operations.
The Ministry of Financial Affairs has said that the legislation’s implementation date might be set after additional regulatory revisions, with enforcement anticipated no sooner than late 2025.
