Taiwan government enforces 'silicon shield' by restricting TSMC from exporting high-end tech

The Taiwanese government is planning to better control exports of its advanced semiconductor process technologies, as well as outbound semiconductor investments according to new reports.

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In a new report from the Economic Daily, we're learning that Taiwanese government officials will enforce the "N-1" technology restriction, which will see TSMC banned from exporting its latest production nodes, and it'll also introduce a penalty for violating the N-1 restriction.

Taiwan Premier Cho Jung-tai has said that the new N-1 policy will apply to TSMC's planned production in the United States, with only one generation older allowed to be deployed overseas. However, TSMC's most advanced semiconductor process technology is its current N3P process node, but before the end of the year we'll see TSMC begin fabbing new chips on its N2 process node, which will then become the flagship process node.

Starting in late 2026 we'll see TSMC with two flagship process nodes: N2P for client applications that don't require advanced power delivery, and the A16 process node that will feature Super Power Rail backside power delivery for HPC applications and AI GPUs, that will consume lots of power.

We don't know which process nodes the Taiwanese government will consider "flagship" or if the government will ban exports of both nodes for 12 months when TSMC introduces successors to its N2P and A16 nodes, or its A14 and A16 nodes. Taiwanese authorities have the right to reject or cancel overseas investments if they consider them compromising national security, damage Taiwan's economic development, violate treaty obligations, or result in unresolved major labor disputes.