Taiwanese govt clears TSMC to make 2nm chips abroad — country lowers its 'Silicon Shield'

TSMC is now permitted to build chips on its upcoming 2nm-class process technologies at its facilities outside of Taiwan, according to J.W. Kuo, Minister of Economic Affairs of Taiwan, who said at a government press conference, reports Taipei Times. Previously, TSMC was prohibited from making chips using its latest process technologies outside Taiwan, largely to preserve the country's 'Silicon Shield,' a strategy that aims to keep production of the most leading-edge process nodes in Taiwan to ensure allied nations will defend the country in the event of a Chinese attack. However, while TSMC can formally export its N2-series process to the U.S., its only currently planned 2nm-capable fab will only come online by the decade's end.

"Those were old-time rules. Times have changed," Kuo said at the conference, according to Taipei Times. "Private businesses should make their own business decisions based on their own technological progress. The basic principle is that businesses can make profits from their overseas investments. TSMC is building factories in the U.S. with the aim of serving its U.S. customers, as 60% of the world's chip-designing companies are based in the U.S."

TSMC previously faced restrictions preventing Taiwanese companies from using leading-edge technology in overseas facilities. These rules required overseas chip production to lag at least two generations behind domestic operations. However, Taiwan's government has updated its stance, allowing businesses to decide based on technological advancements and market opportunities.

Right now, TSMC produces chips on its N4-series (4nm-class) technologies at its Fab 21 phase 1 in Arizona. The company's next module — Fab 21 phase 2 — is expected to be capable of making chips on its 3nm-class fabrication processes and is set to come online in 2028. Theoretically, TSMC could install more advanced tools and make Fab 21 phase 2 capable of making semiconductors on its N2-series production nodes. However, under the current roadmap, TSMC's A16 and N2 fabrication technologies are set to be used at Fab 21 phase 3 by the end of the decade. The total investment in Arizona is expected to exceed $65 billion.

Whether TSMC will export its 2nm-class manufacturing process to its U.S. facilities remains to be seen. The company will have at least two sites capable of making 2nm chips in Taiwan in 2025 – 2026. It is reasonable to assume that the company will have enough capacity for its N2, N2P, N2X, and A16 fabrication processes in the next few years.

Minister Kuo also addressed concerns about potential shifts in U.S. trade policies under Donald Trump. Kuo highlighted Taiwan's strong technological capabilities and said he expected minimal impact on Taiwanese exporters, who are gaining from the U.S.-China trade war. Many Taiwanese manufacturers are replacing Chinese suppliers for U.S. companies and increasing production in Taiwan. He downplayed the long-term impact of Trump's possible policies, noting that his presidency is limited to four years, which reduces his potential influence on the global trade.