TSMC Can't Legally Make 2 nm Chips in the US Yet, Latest Nodes Must Remain in Taiwan

[AleksandarK]

Even with billions of US dollars being invested overseas, TSMC cannot legally manufacture its most advanced nodes outside of Taiwan. According to Taiwan's Minister of Economic Affairs J.W. Kuo, "Since Taiwan has regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently." He added, "Although TSMC plans to make 2-nanometer chips [abroad] in the future, its core technology will stay in Taiwan." This provides crucial insight into TSMC's strategic positioning, both in its US expansion plans and in navigating global geopolitical waters, especially with Taiwan being the major hub of silicon innovation. Taiwan's semiconductor industry follows strict regulations regarding overseas production capabilities, requiring companies to maintain their most advanced manufacturing processes within Taiwan.

The company's international expansion strategy includes significant developments in the United States. TSMC's Arizona facilities are central to these plans, with multiple fabs in different stages of development. The initial Arizona facility will begin producing 4 nm chips imminently, while a second facility, scheduled to open in 2028, will manufacture then mature 3 nm and 2 nm chips. A third planned facility aims to produce 2 nm or more sophisticated chips. Meanwhile, Taiwan-based facilities will produce more advanced chips at the same time, with volume production of A-16 chips planned for late 2026, following the rollout of 2 nm chip production in 2025. Furthermore, Taiwan-US semiconductor cooperation will continue regardless of political changes. Taiwan Semiconductor Industry Association (TSIA) Chairman and TSMC Senior Vice President Cliff Hou noted that historical evidence suggests US electoral outcomes have not significantly impacted this technological partnership, though some adjustments may occur.



This situation raises critical questions about the effectiveness of the CHIPS and Science Act's objectives. Despite TSMC being awarded substantial US government support—including $6.6 billion in direct grants and up to $5 billion in loans for its Phoenix facilities expansion—Taiwan's legal restrictions on exporting leading-edge technology create a significant policy contradiction. The company cannot legally manufacture its most advanced chips on US soil, which could prompt concerns among US policymakers who have committed billions of taxpayer dollars to establish cutting-edge semiconductor manufacturing capabilities domestically. This disconnect between Taiwan's policies and US technological ambitions might lead to broader discussions about the return on investment for American taxpayers. While TSMC's Arizona fabs will indeed bring advanced manufacturing capabilities to US soil, they won't represent the absolute cutting edge of semiconductor technology.

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[the54thvoid]

It makes complete sense from Taiwan's POV. Most nations have in-built regulations about what domestic companies can do abroad. I don't think this will hamstring US operations. TSMC (and Tawain) understand the strategic importance of keeping their top tech tied down. It is their shield of sorts.

 

[Assimilator]

TSMC was effectively established to come up with a way to make the rest of the world so dependent on Taiwan, that they'd be willing to go to war with the PRC to protect the island. Especially given the lack of loyalty of the incoming US government towards allies, it entirely makes sense for them to retain their most important technologies on Taiwan itself to ensure that shield.

 

[csendesmark]

TSMC was effectively established to come up with a way to make the rest of the world so dependent on Taiwan, that they'd be willing to go to war with the PRC to protect the island. Especially given the lack of loyalty of the incoming US government towards allies, it entirely makes sense for them to retain their most important technologies on Taiwan itself to ensure that shield.

Well, at least they are going to try pull that...

 

[DaemonForce]

I see zero issue with this. Taiwan can't afford that kind of brain drain.

 

[AnarchoPrimitiv]

TSMC was effectively established to come up with a way to make the rest of the world so dependent on Taiwan, that they'd be willing to go to war with the PRC to protect the island. Especially given the lack of loyalty of the incoming US government towards allies, it entirely makes sense for them to retain their most important technologies on Taiwan itself to ensure that shield.

Yes, exactly, I don't blame them at all given recent changes in America....it would be wise for Taiwan to consider itself "on its own" now

 

[Nhonho]

This US dependence on TSMC's Taiwanese factories will only end if the US government give around US$100 billion to GlobalFoundries to it build a gigantic chip factory on US soil, using the most modern machinery from ASML.

Until the US government does not do exactly that, the "CHIPS and Science Act" will be of little use and the US will continue to be riskily dependent on TSMC's factories in Taiwan.

And of course, this giant GlobalFoundries factory on US soil would also have to encompass not only the lithography process, but also all the subsequent steps necessary until the chips are ready for use by OEMs and domestic customers.

And a gigantic factory like this on American soil would generate millions of direct and indirect jobs, in addition to being able to provide and receive support to/from US research centers.

 

[lilhasselhoffer]

So...not really a problem?

When we are talking their absolute latest and greatest it's lines with bad yields and processes that need time in the oven. While not having that kinda sucks...I would infinitely prefer a line of one or two generation old technologies that can pump chips out consistently, and that's basically required given how long mil-spec testing takes, than the best of the best that cost an arm and a leg to only be single digit percentages better than the far more mature processes.

I don't want to touch on the politics, but Taiwan having the costliest and least forgiving processes with months of wait to have their lithography machines delivered isn't a terrible thing. Heck, if we get stuck on another node for 3 generations the "best" technology out there will have processors costing a small fortune to have incremental improvements...where a significantly less expensive (and slightly lower performance) will be pennies on the dollar for costing and allow for much better cumulative performance with all of the multiple-CCD and multi-processor configurations on a single package.

 

[azrael]

It's a bit hilarious. Usually the US dictates what other countries may or may not do. Funny to see the tables turned.

 

[DaemonForce]

Usually, sure. It's a business decision and a geo-political protection strategy. TSMC alone makes Taiwan the world silicon seat. They're not giving up that crown.

 

[Assimilator]

This US dependence on TSMC's Taiwanese factories will only end if the US government give around US$100 billion to GlobalFoundries to it build a gigantic chip factory on US soil, using the most modern machinery from ASML.

Until the US government does not do exactly that, the "CHIPS and Science Act" will be of little use and the US will continue to be riskily dependent on TSMC's factories in Taiwan.

And of course, this giant GlobalFoundries factory on US soil would also have to encompass not only the lithography process, but also all the subsequent steps necessary until the chips are ready for use by OEMs and domestic customers.

And a gigantic factory like this on American soil would generate millions of direct and indirect jobs, in addition to being able to provide and receive support to/from US research centers.

1. GloFo is owned by the Saudis and therefore a far less trustworthy partner than TSMC will ever be, so no, that's never gonna be allowed to happen.
2. GloFo has zero interest in leading-edge nodes, their market position and bread and butter is producing commodity microchips for appliances and vehicles. Low cost, low margin, but high volume is arguably a smarter choice than chasing the bleeding edge, especially when the latter equipment is so expensive and has to be replaced so often.

 

[londiste]

The comments in some previous news threads about why US government is subsidizing Intel - this is why.

 

[SOAREVERSOR]

It's a bit hilarious. Usually the US dictates what other countries may or may not do. Funny to see the tables turned.

Everyone directs what companies can and cannot do when it runs into national security issues or geopolitics. Everyone always has. Everyone always will. The tables have not turned this is the same stuff that's always gone on.

 

[the54thvoid]

Mild OT but linked. My brother worked for Raytheon (EU), but they had zero access to certain designs because of security. Things that a nation has deemed of national importance are usually heavily restricted to research and manufacture in that nation. To the point that the same company requires a separate entity to exist elsewhere.

 

[GodisanAtheist]

The primary goal of the Chips Act was the make sure the US has a clean and reliable supply of domestically manufactured microchips for its defense establishment.

If Chyna invades Taiwan, those TSMC factories aren't going to be making AMD stuff and NV stuff, they'll be expected to crank out any microchips required for the production of US Weaponry.

The fact that there is a "peace dividend" of domestic commercial chip manufacturing is the cherry on top, it's not the point.

 

[Neo_Morpheus]

1. GloFo is owned by the Saudis and therefore a far less trustworthy partner than TSMC will ever be, so no, that's never gonna be allowed to happen.
2. GloFo has zero interest in leading-edge nodes, their market position and bread and butter is producing commodity microchips for appliances and vehicles. Low cost, low margin, but high volume is arguably a smarter choice than chasing the bleeding edge, especially when the latter equipment is so expensive and has to be replaced so often.

Those are very good points.

Now I wonder, does Texas Instruments still has fabs?

The comments in some previous news threads about why US government is subsidizing Intel - this is why.

Given how they have shown over and over that they cant do anything right (without lying or bribing), I would be apprehensive about giving them more billions just to be squandered away.

 

[Nater]

That's cool Taiwan. The price of F35's just doubled. Weird.

 

[usiname]

The comments in some previous news threads about why US government is subsidizing Intel - this is why.

Intel have fabs??? Who can believe when they manufacture almost everything in TSMC...

 

[Kapone33]

Intel have fabs??? Who can believe when they manufacture almost everything in TSMC...

Intel have Fabs all over the planet.

 

[PCL]

This US dependence on TSMC's Taiwanese factories will only end if the US government give around US$100 billion to GlobalFoundries to it build a gigantic chip factory on US soil, using the most modern machinery from ASML.

Until the US government does not do exactly that, the "CHIPS and Science Act" will be of little use and the US will continue to be riskily dependent on TSMC's factories in Taiwan.

And of course, this giant GlobalFoundries factory on US soil would also have to encompass not only the lithography process, but also all the subsequent steps necessary until the chips are ready for use by OEMs and domestic customers.

And a gigantic factory like this on American soil would generate millions of direct and indirect jobs, in addition to being able to provide and receive support to/from US research centers.

Because there's nothing else necessary like expertise or patented technologies, right? It's just buy the equipment, turn it on and enjoy your position as a leading global chipmaker! /s

 

[seronx]

GloFo has zero interest in leading-edge nodes, their market position and bread and butter is producing commodity microchips for appliances and vehicles. Low cost, low margin, but high volume is arguably a smarter choice than chasing the bleeding edge, especially when the latter equipment is so expensive and has to be replaced so often.

Leading-edge nodes should re-appear after 12FDX launches. Since, GlobalFoundries is also in the 10nm/7nm FDSOI Europe alliance.

As well as Malta finally getting FDX production:

$1.5B from USA and €7.4B(both ST/GF) from EU. Means GlobalFoundries must [continue investing in the development of the next generation of FD-SOI technologies].

SOIL, WP2, T2.3 "Electrostatic and mobility enhancement" [(1) specific SOI substrates(sSOI) able to generate global constraints on transistors NMOS device couple with study to relax the strain locally for PMOS devices. (CEA; SOITEC)] Means that GlobalFoundries 7nm-target for Malta should be sooner than later. Global NFET strain with local PFET strain implies that GlobalFoundries won. The sSOI wafer will be tensile Si and not SiGe. Europe/USA there is no barrier for 7nm-class FDX at Dresden or Malta.

 

[usiname]

Intel have Fabs all over the planet.

You mean canceled fabs all over the planet

 

[tajoh111]

Those are very good points.

Now I wonder, does Texas Instruments still has fabs?

Given how they have shown over and over that they cant do anything right (without lying or bribing), I would be apprehensive about giving them more billions just to be squandered away.

Intel CEO complains 'this is taking too long' after investing $30B but receiving zero CHIPS Act funding

Which is why it had to kick-off its fab co-investment program.

www.tomshardware.com

Intel has not received anything. Intel is being spread to thin to keep up with TSMC which is likely one of the reasons for their lackluster products.

Chip manufacturing is ridiculously expensive. TSMC spends 30-40 billion annually on R and D and plants which Intel can't keep up with. Intel has to spend the money first before they get any money back from the Chips act. Considering Intel not that long ago was stuck at 14nm and is almost caught up to TSMC for their highest performing node, it's clear where a huge portion of their spending has gone.

AMD fans just want to see Intel burn to the ground.

 

[Kapone33]

Intel CEO complains 'this is taking too long' after investing $30B but receiving zero CHIPS Act funding

Which is why it had to kick-off its fab co-investment program.

www.tomshardware.com

Intel has not received anything. Intel is being spread to thin to keep up with TSMC which is likely one of the reasons for their lackluster products.

Chip manufacturing is ridiculously expensive. TSMC spends 30-40 billion annually on R and D and plants which Intel can't keep up with. Intel has to spend the money first before they get any money back from the Chips act. Considering Intel not that long ago was stuck at 14nm and is almost caught up to TSMC for their highest performing node, it's clear where a huge portion of their spending has gone.

AMD fans just want to see Intel burn to the ground.

You mean some. I personally love competition. We don't need 10 core CPUs for $1000.

 

[csendesmark]

Would be a shame if ASML would not sell the new 2nm EUV lithography systems after the Americans give them an offer the Dutch can't refuse