Taiwan Semiconductor Manufacturing Company (TSMC) has accelerated its investment in the US to build a local chip supply chain. But despite the heavy funding, Taiwan’s laws continue to restrict how advanced these operations can become. Due to this, the US may never receive TSMC’s most advanced production nodes despite ongoing cooperation between Washington and Taipei.
The US might not get TSMC’s advanced chip supply chain despite huge investments
Concerns in Taiwan have intensified as its homegrown company, TSMC, announces its plan to expand abroad, including in the US. Industry experts and policymakers fear that the firm’s overseas manufacturing could weaken the country’s strategic importance. During a recent legislative review, leaders in Taiwan questioned whether the current administration is doing enough to safeguard core semiconductor advantages while allowing foreign expansion.
The semiconductor industry is very important for Taiwan as it underpins economic stability, defense planning, and long-term innovation leadership. Moreover, the government has repeatedly emphasized the so-called N-2 policy, which limits how advanced offshore manufacturing can be. Because of this particular policy, the US fabs would always trail Taiwan by two process generations.
Taiwan wants to maintain its edge in the industry
Further, the officials have added that most of TSMC’s research staff and sensitive development work remain on the island and follow domestic regulations. To give you a broader idea of how this policy affects the US or any other foreign nation, Taiwan would allow the export of next-generation nodes only after a clear technological gap has been established.
TSMC had earlier announced its plan to add a 3nm chip production facility in Arizona. The high-production manufacturing is expected to start from 2027. And by this time, Taiwan would likely move toward 2nm and 1.6nm nodes. This ensures a clear technological gap, as per the policy. However, domestic players may gain from this dynamic if they expand well in the meantime.
