Taiwan Enforces Export Restrictions on TSMC's Advanced Chip Technology

Taiwan has enacted a new law under its amended Industrial Innovation Act to restrict exports of its most advanced semiconductor process technologies, primarily targeting TSMC's cutting-edge nodes. The law, known as the 'N-1' policy, requires that any chip manufacturing technology exported overseas must be at least one generation behind what is used domestically, effectively barring TSMC from deploying its latest nodes, such as 2nm (N2) and upcoming 1.6nm (A16), outside Taiwan. This move is designed to maintain Taiwan’s technological and geopolitical edge, ensuring the island remains the hub for the world’s most sophisticated chipmaking and safeguarding national security. The law also grants the government authority to veto or cancel overseas investments and joint ventures that could threaten national interests. There remains uncertainty over how Taiwan will classify 'flagship' nodes for future restrictions, especially as TSMC plans multiple next-generation processes. The policy complicates U.S. ambitions to localize the most advanced semiconductor manufacturing and highlights Taiwan's leverage in the global tech supply chain.