TSMC Gets Green Light to Produce 2nm Chips Overseas as Taiwan Lowers ‘Silicon Shield’

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The Taiwan Ministry of Economic Affairs announced that TSMC has received approval to manufacture its advanced 2nm-class chips at its international facilities, as stated by Minister J.W. Kuo during a press event reported by Taipei Times. Previously, the production of cutting-edge semiconductor technologies by TSMC was confined within Taiwan’s borders to maintain its ‘Silicon Shield’ strategy. This policy was designed to ensure the retention of high-tech manufacturing on the island, thereby securing international support in case of any aggressive moves by China. Yet, now TSMC is set to extend its N2-series process capabilities to the U.S., although its first 2nm-capable factory there is scheduled to start operations only at the end of this decade.

“The old regulations are outdated. The landscape has evolved,” Kuo remarked at the conference, as per Taipei Times. He emphasized that private companies should drive their decisions based on technological advancements and profit opportunities from global investments. He noted that TSMC’s expansion in the U.S. is strategically aimed at catering to its American clients, highlighting that 60% of global chip design firms are headquartered in the U.S.,” he explained.

Previously, Taiwanese firms were restricted from deploying state-of-the-art technology in their overseas plants, with a mandate that foreign production must be at least two generations behind Taiwan’s capabilities. The updated policy from the Taiwanese government now allows companies more freedom to operate based on current technological and market dynamics.

Currently, TSMC is manufacturing its N4-series (4nm-class) chips at its Fab 21 phase 1 in Arizona. The upcoming Fab 21 phase 2, slated for completion in 2028, is expected to handle 3nm-class chip production. There’s potential for this facility to upgrade further to accommodate the N2-series processes, though as per the existing plans, these advanced technologies will be implemented in Fab 21 phase 3 by the decade’s close. The total investment in the Arizona site is projected to surpass $65 billion.

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It remains uncertain whether TSMC will introduce its 2nm manufacturing process to its U.S. operations. However, TSMC plans to have at least two facilities in Taiwan capable of producing 2nm chips by 2025 – 2026, which suggests sufficient production capacity for its various advanced chip technologies in the near future.

Regarding potential changes in U.S. trade policies under Donald Trump, Minister Kuo reassured that Taiwan’s robust tech industry should mitigate any significant effects on local exporters benefiting from the U.S.-China trade conflict. Many Taiwanese companies are stepping in to replace Chinese suppliers for American firms, thereby ramping up production within Taiwan. Kuo played down the long-term effects of any policies from Trump, pointing out that the limited duration of his presidency constrains his long-term influence on global trade dynamics.

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