**Phoenix**: Taiwan Semiconductor Manufacturing Company (TSMC) is set to invest an additional $100 billion in the U.S. to enhance domestic production of AI chips, creating multiple fabrication plants and strengthening the U.S. semiconductor ecosystem amid increasing geopolitical challenges.
Taiwan Semiconductor Manufacturing Company (TSMC) has announced a significant expansion of its investment in the United States, amounting to an additional $100 billion, aimed at establishing domestic production of artificial intelligence (AI) chips. This investment is poised to create three new chip fabrication plants, two advanced-packaging facilities, and a research and development centre near Phoenix, Arizona. TSMC’s commitment marks the largest single foreign direct investment in the history of the U.S. The timeline and detailed roadmap for this project have yet to be released.
The motivation behind TSMC’s expansion relates not only to supporting its clientele, which includes technology giants such as Apple, Nvidia, AMD, Broadcom, and Qualcomm, but also to circumvent potential tariffs that U.S. President Donald Trump had threatened to impose on imports from the Taiwanese company, potentially reaching as high as 50%. TSMC’s proactive investment strategy aims to bolster its manufacturing capabilities in the U.S. amid challenges faced by rival companies like Intel and Samsung, which have seen their production ramp-ups slow in the U.S.
C.C. Wei, the CEO of TSMC, stated, “This vision is now a reality,” emphasizing the success of the existing fabrication facility in Arizona, which commenced operations in late 2024 and currently employs over 3,000 individuals across 1,100 acres. The desired expansion is seen as a vital move to enhance the U.S. semiconductor ecosystem by establishing a robust domestic supply chain for AI technologies.
During a White House event featuring TSMC’s CEO, Trump remarked on the fundamental role of semiconductors in the economy, saying, “Without semiconductors, there is no economy.” He further insisted on the necessity for the U.S. to develop its own manufacturing capabilities in this sector due to Taiwan’s dominant position in the market. Trump stated, “Taiwan pretty much has a monopoly on that market,” highlighting concerns of national and economic security driven by reliance on Taiwanese production amidst rising geopolitical tensions.
The U.S. Secretary of Commerce, Howard Lutnick, noted that TSMC’s expansion had been facilitated by financial incentives, including a $6 billion grant from the CHIPS Act which had been initiated under the Biden administration. Lutnick referenced the political backdrop, stating, “America gave TSMC 10% of the money to build here,” attributing part of TSMC’s decision to invest in the U.S. to the avoidance of tariffs that would otherwise increase operational costs.
Amid TSMC’s expansion, competitors such as Intel and Samsung are facing setbacks; Samsung has postponed plans for new facilities in Texas, while Intel has delayed its Ohio development until at least 2030. This situation may complicate America’s goal as outlined in the CHIPS Act, which aims for the U.S. to capture up to 40% of the global advanced semiconductor market by 2030, a target that experts believe is becoming increasingly unattainable without significant new expansions from these companies.
As TSMC strengthens its U.S. operations, the firm faces systemic issues, including a shortage of skilled workers and the need for sustained government support, like tax benefits and grants, to ensure the industry’s growth and responsiveness to global demands. Industry analysts have indicated that the eventual aim of having substantial production capacity of advanced chips within the U.S. remains a complex challenge, particularly in light of geopolitical dynamics involving Taiwan and its critical role in the semiconductor supply chain.
By 2030, TSMC anticipates it will be producing over 300,000 wafers per month in Taiwan at sizes of 2nm and below, with expected U.S. capacity projected to reach around 80,000 wafers monthly, a quarter of its predicted output in Taiwan. The disparity in technology advancement and manufacturing capacity between U.S. and Taiwanese fabs is a central concern, highlighting ongoing risks associated with global semiconductor supply chains and their vulnerabilities to external political tensions.
Source: Noah Wire Services
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