Taiwan Ensures Chip Mastery by Holding TSMC’s Top Tech Within Borders

The National Science and Technology Council of Taiwan (NSTC) has confirmed that the most advanced microchip manufacturing technologies of TSMC will not be allowed to leave the country. As authorities stated, this principle is enshrined in the so-called ‘N-2’ rule, which strictly limits the export of key semiconductor developments. Deputy Minister Lin Fa-cheng explained that Taiwan operates an official list of critical technologies under government control. This list is reviewed annually and applies to specific companies, types of equipment, and technical production parameters.

According to the ‘N-2’ rule, TSMC technologies used abroad must lag at least two generations behind the most advanced ones applied domestically. In other words, if the company produces chips using 1.2 or 1.4-nanometer processes in Taiwan, a maximum level of 1.6 nanometers will be allowed for production abroad. The smaller the process size, the more complex and technologically advanced the chip is considered. Lin also noted that the majority of TSMC’s research staff continues to work in Taiwan, strictly adhering to existing requirements. The control extends not only to equipment and technologies but also to specialists who have access to sensitive developments.

On a related note, recently TSMC announced a major initiative to bolster its research and development capabilities within Taiwan, coinciding with plans to establish cutting-edge semiconductor fabs that focus on even smaller process nodes by 2026. These plans indicate TSMC’s commitment to remain at the forefront of semiconductor innovation while adhering strictly to governmental regulations regarding technological transfer and export.

Additionally, the semiconductor industry has been experiencing rapid growth, with Taiwanese players contributing significantly to global supply chains. Meanwhile, the United States competitors are scaling up investments to prevent potential disruptions caused by reliance on foreign manufacturing amid geopolitical tensions.

Deputy Head of the Industrial Development Bureau, Zou Yu-xin, reminded that any TSMC investment projects in the US or other countries must still receive approval from Taiwanese regulators. Major overseas initiatives by the company are required to go through the Investment Commission for scrutiny, regardless of their scale and strategic significance.