Taiwan Government: "TSMC's US Factory Subject to 'One Step Behind Technology' Regulation"

TSMC Announces $100 Billion Investment in the U.S.
Concerns Raised Over Potential Shift to 'America's TSMC'
"Principle of 'No Transfer of Cutting-Edge Technology' Firmly Maintained"

Reuters Yonhap News

The Taiwanese government announced on the 3rd (local time) that its principle of "no transfer of cutting-edge technology" to TSMC, the world's largest foundry (semiconductor contract manufacturing) company and a Taiwanese enterprise, remains unchanged. Concerns have grown that TSMC might lose its fundamental semiconductor technological edge as it expands its investment in the U.S. following the inauguration of the second Trump administration.

According to reports from Liberty Times and China Times on the 13th, Liu Jingqing, Chairman (minister-level) of Taiwan's National Development Council (NDC), reaffirmed during a government inquiry session at the Legislative Yuan (parliament) the day before that the U.S. factories will be subject to the regulation of "one generation behind technology" in relation to TSMC's $100 billion (approximately 145 trillion KRW) investment in the U.S.

Chairman Liu stated that the "N-1" regulation, where Taiwanese companies operate advanced processes (N) in Taiwan and one generation lower processes (N-1) in overseas factories, will also apply to TSMC's U.S. investments.

He emphasized, "The government will steadfastly uphold the three core principles: 'No transfer of the latest technology,' 'No transfer of the most critical technology,' and 'National security comes first.'"

Zhuo Longtai, Premier-level head of Taiwan's Executive Yuan, also said, "If national security is violated, approval will not be granted," revealing that the "N-1" related regulation was first mentioned during multiple communications between the government and industry.

Wu Chengyuan, Chairman of Taiwan's National Science and Technology Council (NSTC), also stated, "There is no possibility that TSMC will become 'America's TSMC (ASMC)'." Hong Kong daily South China Morning Post (SCMP) and others reported that after news of TSMC's large-scale U.S. investment spread, critical public opinion grew among Chinese netizens, with comments such as "TSMC has become USMC or ASMC."

Additionally, an official from the Ministry of Economic Affairs stated that TSMC's cutting-edge 2nm (nanometer, one billionth of a meter) semiconductors have completed trial production in Taiwan and will enter mass production this year, while production of 2nm products in the U.S. is expected around 2028, at least 48 months later than Taiwan. Furthermore, Taiwan plans to pursue production of 1.4nm and 1nm chips around 2028, which will still comply with the "N-1" regulation.

TSMC is the world's largest semiconductor foundry (contract manufacturing) company. Chairman Wei Zhejia announced on the 3rd after meeting with U.S. President Donald Trump at the White House that TSMC will invest $100 billion in the U.S. This announcement increases TSMC's total U.S. investment to $165 billion.