Taiwan Semiconductor Manufacturing Co.’s plan to expand its manufacturing footprint in the United States has ignited a debate in Taiwan concerning technology security. This discussion centers on the government’s long-standing “N-2 rule.”
The N-2 rule mandates that TSMC’s offshore facilities must utilize technology at least two generations behind its most advanced processes in Taiwan.
The policy faces scrutiny as TSMC accelerates the timeline for its Arizona facilities. Although the Taiwanese government reaffirms that these safeguards remain in place, the rapid international expansion raises questions about maintaining the required technological gap.
This situation creates a strategic dilemma for TSMC. The company navigates geopolitical pressures while investing heavily in international fabs across the U.S., Japan, and Germany.