5 Questions About TSMC’s $100B Investment
TSMC plans to invest $100 billion in the U.S. But there are more questions than answers here.
By Mark LaPedus
In a major move, TSMC has announced its intention to expand its investment in advanced semiconductor manufacturing in the United States by an additional $100 billion.
The expansion includes plans for three new fabrication plants, two advanced packaging facilities and a major R&D center.
Building on the company’s ongoing $65 billion investment in its advanced semiconductor manufacturing operations in Phoenix, Ariz., TSMC’s total investment in the U.S. is expected to reach $165 billion.
During a televised event on Monday, President Donald Trump initially disclosed TSMC’s $100 billion investment plans. Then, TSMC announced its plans on the company’s website.
Brief history of TSMC’s U.S. expansion
Taiwan’s TSMC, the world’s largest foundry vendor, produces around 90% of the world’s most advanced logic chips. The company also manufactures a large percentage of chips at more mature nodes. The vast majority of those chips are produced within the company’s fabs in Taiwan.
Years ago, the company began producing chips in a fab based in Camas, Wash. That fab is producing chips at more mature nodes.
For years, the U.S. government has been pushing TSMC to build advanced fabs in the U.S. Until recently, TSMC resisted, and for good reason. The cost to produce chips in the U.S. is much higher than in Taiwan.
During President Trump’s first term in 2020, though, the administration was able to convince TSMC to invest and build an advanced fab in Arizona.
TSMC was in the process of building that fab during the Biden administration. It wasn’t easy to get the U.S. fab off the ground. First, there aren’t enough skilled fab workers in the U.S. Then, TSMC clashed with labor unions in Arizona.
Meanwhile, during the Biden administration in 2024, the U.S. Department of Commerce awarded TSMC up to $6.6 billion in direct funding under the CHIPS and Science Act. This funding supported TSMC’s investment in Arizona.
Then, in November 2024, Trump won the presidential election in the U.S. The Trump administration is critical of the CHIPS Act. As reported, the CHIPS Act is now in limbo.
At the same time, the Trump administration has threatened to impose tariffs on semiconductors that are imported in the U.S., including those from TSMC. If Trump decides to impose tariffs on imported chips from Taiwan and elsewhere, the move could potentially cause prices to increase for select chips in the marketplace.
Hoping to avoid tariffs, TSMC appears to have found a solution. To circumvent the tariffs, TSMC has decided to placate the Trump administration and increase its investment in the U.S.
Fab expansion plans
Nonetheless, TSMC has three advanced fabs in the works in the United States. Those fabs have already been announced. What’s new is that TSMC plans to build additional plants in the U.S.
In late 2024, the company moved into production within its first advanced fab in the U.S. Located in Arizona, TSMC’s fab is currently producing 4nm chips. TSMC's Arizona fab employs more than 3,000 people on 1,100 acres of land.
The company is expected to move into production within its second Arizona fab in 2028 and in the third facility by the end of the decade.
Based on the new announcement, TSMC plans to build more fabs as well as two advanced packaging facilities. The company’s expanded investment is expected to support 40,000 construction jobs over the next four years and create tens of thousands of high-tech jobs in advanced chip manufacturing and R&D.
Today’s $100 billion chip investment announcement is a big win for TSMC and the Trump administration. Still, there are several questions about this announcement, including:
1) What’s the timeline?
The announcement did not disclose when these new facilities would get built or move into production. It’s also unclear which technologies would be produced in these facilities.
It's my guess that TSMC will accelerate the timeline for the second and third fabs in Arizona. I also believe TSMC will open a U.S.-based advanced packaging plant sooner than later, possibly in 2025.
2) What about the tariffs?
In April 2025, the Trump administration is supposed to impose tariffs on imported semiconductors, including those from Taiwan.
With its $100 billion investment, I believe TSMC has dodged a bullet and will avoid any tariffs in the short term. Long term? It’s unclear.
It’s also unclear if the rest of the semiconductor industry will also sidestep Trump’s tariffs. One thing is clear: Imposing tariffs on semiconductors is a bad idea. Chip prices will likely increase. It disrupts the delicate supply chain. Consumers lose in the long run.
3) Is the CHIPS Act alive or dead?
As reported, the U.S. CHIPS and Science Act, the program designed to boost chip production in the United States, appears to be in trouble. The party may be over for the program. Click here for more details.
4) Will TSMC buy Intel’s fabs?
Intel is in trouble and possibly on the block. In the latest report, Broadcom is looking at buying the design part of Intel, according to the Wall Street Journal. And the Trump administration is trying to get TSMC to invest in Intel’s fabs or buy them, according to the report.
TSMC is not interested, however. It would simply be an enormous financial burden to invest or buy Intel’s fabs. The administration is unhappy about TSMC’s sentiments.
TSMC’s move to invest $100 billion in the U.S. is a better idea. That should be enough to placate the administration.
Still, the questions are clear: What will happen to Intel? Who will save the troubled chipmaker? Does the government need to bail out Intel? No one is exactly sure how all of this will play out.
5) What happens to the “silicon shield” in Taiwan?
Technically, Taiwan is a part of China. Yet, Taiwan is a self-ruled entity with its own constitution and leaders. And to complicate matters, China and Taiwan have not had any diplomatic ties for decades.
In Taiwan, there are some factions who want break free from China and declare independence. That’s not a practical idea. If Taiwan were to announce those intentions, China vows it would invade Taiwan and reclaim the island. In response, the U.S. vows it would defend Taiwan in the event of an attack. So to avoid any conflict, Taiwan maintains the status quo and keeps the independence rhetoric under wraps.
Years ago, Taiwan quietly devised another strategy to protect itself—the silicon shield. This concept is described in a 2001 book, entitled “Silicon Shield: Taiwan's Protection Against Chinese Attack.”
On SemiWiki’s site, Craig Addison, the author of the book, says: “The original Silicon Shield theory, as described in my 2001 book, stated that Taiwan’s role as producer of 90 percent of the world’s IT products (at that time) protected it from an attack by China because the United States, acting in its own self- interest, would come to the island’s defense.”
That’s still the case today as well. As before, Taiwan is a national security issue. It produces an inordinate percentage of the world’s chips, IC packages and other products. The world depends on the island’s chipmakers and packaging houses.
So does Taiwan’s silicon shield evaporate as a result of TSMC’s new investment. The answer is no. Even if TSMC expands its fab footprint in the U.S., a vast majority of the company’s chip production is still located in Taiwan. That won’t change anytime soon. So, the silicon shield in Taiwan remains intact.
However, the Chinese government may view TSMC’s $100 billion announcement in a different light. Beijing may see the move as a way for Taiwan to establish closer ties to the U.S. That poses a threat to Beijing. So do Trump’s new tariffs against China.
It’s a tense situation. Hopefully, it doesn’t get out of control.