Taiwan is tightening controls on the export of advanced technologies, as well as investments by Taiwanese companies in the economies of other countries, including the United States. According to local media, the country’s parliament has passed in the third reading a bill on Article 22 of the Taiwan Industrial Innovation Act, which will limit TSMC’s ability to export advanced technologies, as well as to invest in production abroad.
Image Source: TSMC
The law is expected to go into effect by the end of 2025. Taiwanese Prime Minister Cho Jung-tai said the “N-1” rule would apply when using advanced semiconductor manufacturing technology overseas, which in TSMC’s case means its overseas facilities would be one generation behind local production. That would ensure its most advanced technology stays in the country.
Article 22 also states that overseas investments by Taiwanese companies may be blocked or revoked if they “affect national security” or “have adverse effects on the country’s economic development.” According to United Daily News, this could affect TSMC’s announced plans to increase its investment in U.S. manufacturing by $100 billion. In this case, Taiwanese authorities may require TSMC to apply the “N-1” rule when investing in U.S. semiconductor manufacturing under the new law. The law also provides for fines for failure to comply with overseas investment requirements of up to N$10 million (about $309,700) for each violation.