Taiwan passes law to limit TSMC investments in the US

Article 22 of Taiwan’s Industrial Innovations Act will ensure that TSMC’s newest tech will remain in Taiwan

According to United Daily News, Article 22 of Taiwan’s Industrial Innovations Act has passed its 3rd reading. This means the article has passed into law and will reportedly be implemented within the next six months. This new law from Taiwan targets TSMC, limiting how the company can invest in the US and other countries.

Taiwan’s Premier, Toh Jung-tai, has stated that an “N-1” rule will be applied. This will ensure that TSMC’s most advanced technologies are kept within the country, ensuring that TSMC’s fabs in foreign nations are one generation behind their Taiwanese fabs.

This law comes shortly after TSMC committed to $100 billion (US) worth of investments in the United States. With this law, Taiwan aims to maintain its national security and economic prosperity. TSMC, through its technological leadership and presence in the country, have created a “silicon shield” for Taiwan. If Taiwan were invaded, it would wreak havoc on the world economy, giving Taiwan’s allies a strong reason to protect the nation.

Taiwan’s “N-1” rule should keep TSMC’s bleeding-edge technology on Taiwan’s shores. However, due to the US Trump administration’s heavy use of tariffs, this policy could bring a lot of business to Intel, which hopes to become a TSMC rival. Intel is an American company that manufactures silicon in the US. As such, this law could give Intel an advantage. When it comes to “in America” or “Tariff-free” manufacturing, Intel won’t need to compete with TSMC’s best nodes. That said, it remains to be seen what the US’ tariff policies will affect semiconductors in the future, or if Intel’s lithography tech can continue improving at the same pace.

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