Nvidia Supplier TSMC Faces Regulatory Hurdles In Manufacturing 2-Nanometer Chips Abroad, Minister Says 'Core Technology Will Stay In Taiwan'

Taiwan Semiconductor Mfg. Co. Ltd. TSM is unable to manufacture 2-nanometer chips overseas due to Taiwan’s technology protection regulations, as stated by the Minister of Economic Affairs, JW Kuo.

What Happened: A report on Thursday raised concerns that TSMC may be forced to accelerate the production of advanced 2-nanometer chips at its Arizona factories following Donald Trump‘s re-election as U.S. president, according to the Taipei Times.

Kuo clarified that Taiwan’s laws, designed to protect its technologies, currently prohibit TSMC from manufacturing 2-nanometer chips abroad.

"Although TSMC plans to make 2-nanometer chips [abroad] in the future, its core technology will stay in Taiwan," Kuo said.

Taiwanese law prevents local chipmakers from producing chips abroad that are more advanced than those produced domestically.

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Why It Matters: Despite the regulatory restrictions, TSMC’s U.S. expansion plans remain unaffected by Trump’s re-election, as confirmed by the company earlier this week.

The chipmaker, a major supplier to tech giants like Apple Inc. AAPL and Nvidia Corp. NVDA, is proceeding with its $65 billion investment in advanced semiconductor production facilities in Arizona.

However, the U.S. has recently asked TSMC to halt shipments of chips used in AI applications to customers from China, following the discovery of one of its chips in a Huawei AI processor. This move comes amid Trump’s proposed 60% tariffs, which could significantly impact China’s economy.

Despite these challenges, TSMC’s shares have continued to climb, with the company’s October sales showing the slowest growth since February.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote