A Taiwan supplier’s promise to reserve packaging capacity can leave the shipment date for tested chips unsettled. A US AI-chip developer may be paying for a place in the production schedule while still negotiating the commitments on which its launch depends.
If the supplier has promised only to make capacity available, a missed launch date may say little about whether it has broken that promise.
What the supplier is committing to
Package type, production site, process, quantity, allocation period and qualification requirements define the capacity the supplier is offering. Leaving those details to a later purchase order creates uncertainty if the supplier remains free to decline that order.
There are further steps between access to equipment and delivery of finished chips. A production start depends on dies, substrates and approved technical files arriving when needed, so the agreement needs to identify who supplies them and what happens if they arrive late. Finished output requires agreed test criteria and an acceptance procedure. The parties can attach binding dates to those commitments, but a monthly allocation alone does not establish them. A changed process or replacement site raises a related question: whether the buyer must qualify it again and who bears that cost.
Responsibility can become harder to trace when more than one company performs the work. The entity collecting the prepayment may differ from the one promising packaging or testing. If work will be subcontracted, the buyer needs an agreement identifying who secures that capacity, deals with a missed subcontractor slot and owes any refund. A group logo on the quotation does not resolve those questions.
These are negotiated commitments. Their effect also depends on which document prevails: a reservation schedule can be undermined by conflicting quotation or purchase terms. The same applies to a forecast if the documents leave unclear when it becomes binding, who can revise it or how long the buyer has to respond.
Where the money goes when work stops
The word “deposit” can conceal several different arrangements. Money might pay for the reservation itself, reduce the price of future orders or serve another agreed purpose. A buyer expecting invoice credits needs to know when they are applied, whether unused credits expire and what happens to the balance if the supplier cannot provide the capacity.
If work stops after some invoices have been issued, the parties can start with the amount prepaid and account for credits already used, any earned reservation fee and proposed cancellation charges. That calculation reveals both the remaining balance and any disputed deductions. There is still a practical difference between returning the balance in cash and offering credit against future orders. Credit has limited value to a buyer ending the relationship.
Buyer cancellation, supplier delay, qualification failure and termination after a prolonged interruption need not produce the same result. A negotiated refund clause can give each event its own trigger, calculation and payment date. Those terms should be settled alongside the damages provisions, because the agreement may treat repayment of unused money and compensation for delay differently.
Taiwan contract law is relevant only if it governs the obligation. The supplier’s Taiwan address does not decide that issue. Article 20 of Taiwan’s Choice of Law Act starts with the parties’ choice of law and, without an effective choice, turns to the closest connection.
Where Taiwan law applies, Civil Code Article 250 generally treats an agreed payment for breach as the total damages for the relevant nonperformance unless the parties agree otherwise. Article 252 permits a court to reduce an excessive contractual penalty. A delay payment therefore needs to be read together with the refund clause and damages cap. The parties can negotiate whether the cap covers repayment of unused prepayments and whether the delay payment is exclusive compensation for delay; neither exclusion arises automatically under these provisions.
A “nonrefundable” label also has to be read in context. Article 247-1 can invalidate specified preformulated terms intended for repeated use when they are manifestly unfair in the circumstances. It does not make every reservation fee or liability limit invalid.
A missed date and the decision to walk away
A binding performance date makes it easier to establish when an obligation is late. Civil Code Article 229 distinguishes fixed deadlines from obligations for which a demand is needed. Even then, delay liability depends on responsibility: Article 230 excludes it where nonperformance results from a cause for which the debtor is not responsible. A supplier’s explanation, the agreed allocation of risk and any notice requirements all bear on a claim.
Under Article 254, the party facing delayed performance may give a reasonable period for performance and rescind if that period passes without performance. Article 255 permits rescission without that demand where performance at the specified time is necessary to achieve the contract’s purpose, as established by the contract’s nature or the parties’ expressed intention. A launch date kept only in the buyer’s internal plan does not, by itself, establish that exception.
After valid rescission, Article 259 provides for restoration of what the parties received, subject to a different statutory or contractual arrangement. A buyer seeking its money back thus needs an identified contractual or legal basis. A missed forecast alone does not establish a right to recover the whole prepayment.
The records needed to assess that claim are also useful when deciding whether to accept another slot. Signed agreements, incorporated terms, accepted orders, payment entries and successive allocation schedules show what changed; the technical-readiness record helps distinguish unavailable supplier capacity from missing customer inputs. If the parties agree to move production, the new schedule should say whether it changes timing alone or also settles the earlier delay, the prepayment balance and any accrued claims.
For a Taiwan-law consultation, an initial inquiry can describe the transaction, whether payment has been made and the next deadline. Keep chip designs, trade secrets, banking details and identity documents out of that inquiry; arrange document delivery with the attorney.
Sources and review date
The official provisions linked above were checked on October 8, 2026. Chinese statutory text controls.
- Choice of Law Act, Article 20.
- Civil Code, Articles 229–230, 247-1, 250, 252, 254–255 and 259.
This article provides general Taiwan legal information. The governing law, complete agreement and performance record determine the advice for a particular transaction.
This article provides general information and is not legal advice on any individual matter.
