Taiwan ready to discuss 2nm transfer to U.S. following Trump's comments

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But TSMC may have different plans.

Silicon wafer
(Image credit: TSMC)

Just weeks after a Taiwanese minister said it was illegal for TSMC to transfer its leading-edge process technology—such as N2 (2nm-class)—from Taiwan to its overseas fabs, another minister said that after N2 enters mass production in the second half of 2025, discussions about transferring the node to friendly democratic nations can take place, reports Economic Daily (as noticed by Dan Nystedt). Yet, TSMC only plans to start making 2nm-class chips in America by the decade’s end.

According to the company’s roadmap, TSMC’s N2 fabrication process is expected to enter mass production by the end of 2025. At that time, discussions can occur about whether the 2nm process should be extended to other friendly democratic nations, said Cheng-Wen Wu, National Science and Technology Council (NTSC) Minister. The comment comes after J.W. Kuo, Minister of Economic Affairs, reminded us that TSMC cannot transfer its leading-edge process technology to other countries due to Taiwanese regulations. As a result, the best production node TSMC can use in the U.S. in 2025 – 2026 will be N3 (3nm-class process technology).

Based on TSMC’s current roadmap for its Fab 21 (which is aligned with funding under the CHIPS Act), phase 1 of the facility is set to begin mass production of chips on N4 and N5 nodes in the first half of 2025, phase 2 is expected to product chips using N3 technologies in 2028, and phase 3 is projected to make 2nm-class chips by the end of the decade. However, concerns are mounting that TSMC might be forced to transfer its leading-edge 2nm-class process technology to its U.S. fab earlier than planned.

During the campaign, Trump criticized the Biden administration’s CHIPS and Science Act and said that import tariffs would be a better incentive for chipmakers to build fabs in the U.S. than grants, loan guarantees, and tax credits. If he implements such tariffs, it would force TSMC to transfer more of its advanced nodes to its Arizona facility. However, considering the shortage of fab tools, it is unclear whether the company can equip its fabs ahead of schedule.

There are two things to remember about TSMC’s leading-edge fabrication processes and why they will remain exclusive to Taiwanese facilities, noted analyst Dan Nystedt. The primary reason why TSMC’s most advanced process technologies stay in Taiwan is because they are designed in Taiwan and then ramped up in Taiwan. With the presence of the R&D team, it is easier to ramp up mass production and adjust a process technology for mass production. That said, it is unlikely that TSMC’s leading-edge nodes will enter mass production simultaneously in Taiwan and elsewhere soon.

Anton Shilov
Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

20 Comments Comment from the forums
  • edzieba
    Brazil serves as an example of the effect import tariffs have on domestic manufacture of electronics. Or rather, the lack thereof.
    Reply
  • punkncat
    Meaning to say that the (possible) intended effect of raising tariffs might be to bring production back to the US to pay US workers AND save market competitiveness?
    Wow, maybe the sky isn't falling. ;)
    Reply
  • P.Amini
    edzieba said:
    Brazil serves as an example of the effect import tariffs have on domestic manufacture of electronics. Or rather, the lack thereof.
    Brazil and US are totally different in every aspect when it comes to high-tech electronics. Beside they are very different economically. So probably not the best comparison.
    Reply
  • spongiemaster
    punkncat said:
    Meaning to say that the (possible) intended effect of raising tariffs might be to bring production back to the US to pay US workers AND save market competitiveness?
    Wow, maybe the sky isn't falling. ;)
    For what purpose? US unemployment is at historically low rates right now. All these manufacturing jobs we bring back that aren't needed are only going to result in higher prices for all of us just like they would with tariffs. If the goal is making us all pay more for everything, we might as well go the tariff route as then it can somewhat be dictated through legislation where the money goes.
    Reply
  • bit_user
    The article said:
    Trump criticized the Biden administration’s CHIPS and Science Act and said that import tariffs would be a better incentive for chipmakers to build fabs in the U.S. than grants, loan guarantees, and tax credits. If he implements such tariffs, it would force TSMC to transfer more of its advanced nodes to its Arizona facility.
    First, tariffs are less certain than grants. They can be rescinded with little advance notice, if they turn out to have a large impact on the economy. Also, exceptions are granted for them, and it's hard to predict who will get exceptions and for what. These areas of uncertainty are perceived as risks, by the investors that would be needed to fund the requisite domestic capacity build-out.

    Second, grants solve the problem of capital that's needed to fund these big investments. Attracting private sector loans is not only more difficult, but also more expensive, since they're medium/long-range investments and somewhat risky.

    Finally, tariffs don't force TSMC to do anything. Especially since adding semiconductor fabrication capacity happens on such a long time scale, it's anybody's guess what would happen. I'd feel more comfortable predicting that the biggest US-based consumers of TSMC N2 silicon would start building datacenters in Mexico and Canada (or expanding existing ones), in order to serve the US market. For those in the US relying on TSMC silicon, we might just have to either pay more or live with an older node. At this point, you're talking about a minority slice of AMD's market.
    Reply
  • Notton
    The last time US did tariffs, it caused the great depression.

    There's a thing in economics called "comparative advantage".
    It's not just about lower costs to manufacture goods, it's also about R&D, engineering, raw materials, man-power & expertise, etc.
    Reply
  • punkncat
    Notton said:
    The last time US did tariffs, it caused the great depression.

    There's a thing in economics called "comparative advantage".
    It's not just about lower costs to manufacture goods, it's also about R&D, engineering, raw materials, man-power & expertise, etc.


    Of all the main contributors, I feel like Smoot- Hawley was the least of them. Perhaps icing on the cake. To say "caused" is giving it more credit than it was due in light of all else that happened to be going on at the time. Perhaps, sort of a knee jerk reaction rather than fully contributing causation. Nice reference though. I grant +1 interwebz to use as you see fit.
    Reply
  • stonecarver
    bit_user
    I have to say I admire your wisdom on many subjects and you have called me out where I didn't quite fully understand a thread here or there and and you kindly corrected me and I thank you along the way here on Toms.

    These tariffs that like you said we still don't know the good or the bad that the fallout will develop coming I the near future just put a cold shiver down my spine. Back in 2021 there was a post here on Tom's joking about covid and saying how lucky were not to be the kids in the photo posted to the thread who were playing socker over in China, believing we're safe.

    That was painful on the whole world.

    I feel like this will be the covid of economics if it gets out of control.

    Also makes me think about all those news stories on Toms where smugglers got busted trying to bring thousands of CPU's into China to avoid customs over there.

    Will this be the norm here in the unreality/ reality of our tomorrow. Man goes to Mexico and busted for 300 CPU's in the cavity of a surf board at the boarder. News's at 11.
    Reply
  • punkncat
    Keep in mind that further muddy water comes of NAFTA in the case of the aforementioned scenario.
    Reply
  • bit_user
    Thanks for the compliment!

    stonecarver said:
    These tariffs that like you said we still don't know the good or the bad that the fallout will develop coming I the near future just put a cold shiver down my spine.
    I'm not too worried, because I'm still quite skeptical they'll happen as advertised. I think there's not the political will to do something so inflationary, when inflation is clearly top-of-mind for a lot of people.

    I see high, across-the-board tariffs mostly as a negotiating tactic. We can see this most clearly, if we look at what's happened with Mexico and Canada, just in the past few days.

    The other purpose they serve is to enable further tax cuts on income and capital gains, but then if you start cutting more holes in the tariffs than Swiss cheese, they don't even do that very well.
    Reply