Taiwan is facing major changes in the energy sector that could drastically affect the country's economy and the global semiconductor market. The island's Ministry of Economic Affairs has prepared amendments to the Energy Management Act, requiring large commercial consumers to provide their own electricity. At the center of these changes is the island's largest energy consumer — TSMC.

The end of the centralized supply era

Until now, giants like TSMC have enjoyed the advantages of scale by connecting to a single centralized power grid. However, the new legislative initiative puts this model at risk. According to the plan, scheduled for consideration by the legislative body on July 22, large companies will be required to install their own infrastructure for generating and storing electricity.

Previously, under the "Provisions on the Development of Renewable Energy," large consumers were only required to offset 10 percent of their consumption from "green" sources. Now the requirements are tightening: the issue is full autonomy or the creation of powerful local generating capacities.

Who will be affected by the new rules?

The scope of the amendments covers all commercial enterprises consuming at least 5 MW. More than 400 companies in Taiwan's key industrial sectors are at risk:

  • Semiconductor industry;
  • Optoelectronics;
  • Metallurgy;
  • Petrochemicals;
  • Data centers (including infrastructure for artificial intelligence).

An important exception is schools and hospitals, which will continue to receive energy under the old rules, highlighting the social nature of the reform.

Economic consequences for TSMC

As the largest electricity consumer on the island, TSMC will be in the most vulnerable position. If the amendment becomes law, the company will have to invest colossal funds in building its own power plants and energy storage systems. This will lead to a significant increase in overhead costs.

Experts warn that TSMC's additional costs will not remain within the company. Ultimately, the rise in chip production costs will fall on the shoulders of ordinary electronics consumers around the world, which could lead to an increase in the price of gadgets and equipment.