Taiwan plans to tighten control over the export of advanced process technologies, as well as outgoing semiconductor investments, informs Economic every day. New legal measures enforce the limitation of “N-1” technology, essentially except for the export of the latest production nodes and will introduce penalties for violations. However, there is a stern TSMC catch with recent rules.
The “N-1” policy, confirmed by Prime Minister Cho Jung-Tai, will apply to the planned production of TSMC in the United States. This approach limits the export of the most advanced process technology, enabling the implementation of only one generation abroad.
Before this amendment, Taiwan’s recipes did not clearly require such controls in semiconductor production processes. These rules are based on art. 22 of the Act on the introduction of industrial innovations, which is to enter into force by the end of 2025.
There is a stern hook for the most advanced TSMC process technology. Today, TSMC has one leading node: N3P production technology. But by the end of the year it will start to produce systems from the N2 production process, which will become its flagship.
However, from the end of 2026, TSMC expects it to have two flagship nodes: N2P for the application of customers that do not require advanced power supply and A16 with the supply of Super Power Rail power to the HPC application, which consume high power.
It will turn out which process technology will be considered “flagship” by the Taiwanese authorities, and therefore narrow exports, or if the government prohibits the export of both nodes for a year, when TSMC introduces the successors of N2P and A16, its nodes A14 and A16.
In addition, the changed law, adopted after the third reading in the Taiwan parliament, gives Taiwan authorities the right to reject or cancel foreign investment, if it turns out that it was found that they expose national security, damage to the country’s economic development, violates treaty obligations or causes unresolved more disputes about work.
Under the recent law, these six conditions are stopped, but are now supported by higher level legislation. Amended art. 22 also includes the possibility of partial or fully rejecting the investment or attachment of conditions for approval. If the company receives permission, but later launches any of these threats, the central authorities are authorized to demand repair actions or completely cancellation of the investment, if the problem is stern. The recent law increases existing investment restrictions from subordinate to formal provisions and adds legal consequences for non -compliance.
The Ministry of Economic Affairs stated that the date of implementation of the law will be announced only after improvement in six months. This means that the earliest enforcement may start by the end of 2025. The implementation of the regulation appears among the growing geopolitical risk, and after TSMC announced plans to raise investments in American production capacity from $ 65 billion in four years to 165 billion in an undisclosed period.
The amendment also introduces penalties that have not been present before. Companies that invest abroad without prior consent can face a fine of 50,000 NT to 1 million NT (30,830 USD). If the investment is approved, but the company will not correct the identified violations later – such as the exposure to national security or damage to economic development – the authorities may impose a repeated fine of USD 500,000 (USD 15,414) to USD 10 million (308,286 USD). But given that TSMC plans to invest $ 165 billion in US facilities, a fine of USD 300,000 will hardly affect financial results.
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