Core Viewpoint - Taiwan is considering new export regulations that would restrict TSMC from exporting technologies that are more advanced than two generations behind its leading-edge processes, potentially slowing TSMC's expansion in the U.S. market [1][3]. Group 1: New Export Policy - The new export policy is based on the government's "N-2 rule," which allows only the export of technologies that are two generations behind Taiwan's leading technology. This is a shift from the previous "N-1 rule," which permitted exports of technologies at least one generation behind [3]. - Under the new rule, if TSMC develops a 1.2nm or 1.4nm manufacturing process, only its 1.6nm products would qualify for export [3]. Group 2: TSMC's Manufacturing Capabilities - TSMC's Fab 21 in Arizona can currently produce chips using N4/N5 processes, while in Taiwan, TSMC has multiple fabs capable of 3nm manufacturing and is set to begin mass production of 2nm chips [4]. - Although Fab 21 currently meets the N-2 rule, future production using 3nm processes at the second phase of Fab 21 may not comply with the new regulations, as 3nm is only one generation behind [4]. Group 3: R&D and Workforce - A significant portion of TSMC's R&D personnel remains in Taiwan, ensuring that future process developments are rooted locally, despite the company's overseas capacity and R&D centers [4]. - The concentration of engineers and scientists in Taiwan is seen as a protective measure for intellectual property and human capital in the semiconductor industry [4]. Group 4: Investment Scrutiny - Any future investments by TSMC in the U.S. will be subject to current legal reviews, with projects exceeding certain thresholds requiring scrutiny by an investment committee [5].