Taiwan Semiconductor Manufacturing Co. (TSMC) announced a bold plan to invest an additional $100 billion in the U.S. This move would significantly enhance the country’s capacity to produce chips for the booming AI sector.
On Monday, TSMC revealed plans to build three new fabrication plants, two advanced packaging facilities, and a major research and development center. With this new funding, TSMC’s total investment in U.S. chip manufacturing will reach $165 billion, marking it as the largest single investment by a foreign company in U.S. history.
Details on the construction timeline and specific locations for the new facilities remain unclear. However, TSMC stated this investment could generate around 40,000 construction jobs over the next four years while potentially driving over $200 billion in indirect economic benefits for Arizona and the wider U.S. in the decade ahead. TSMC already operates a fabrication plant in Washington state and another in Arizona, where it has another facility under construction slated to begin volume production in 2028.
Analyst Alex Harrowell from Omdia shared that a 10-year timeline seems more realistic for the new plants. TSMC plans to allocate $38 billion to $42 billion for capital expenditures this year, but to add another $100 billion over four years, it would need to increase its spending by $10 billion to $15 billion this year. This likely means reallocating funds from elsewhere, which could cut spending in Taiwan significantly.
There’s also the issue of a shortage in lithography tools from the main supplier, ASML. These tools are crucial for printing intricate circuit designs on semiconductor wafers. Harrowell suggested that concentrating efforts on packaging could be a smart move given these constraints, along with the fact that the extra capital expenses may come later in the timeline.
TSMC has ambitious targets for its advanced packaging process, known as chip-on-wafer-on-substrate (CoWoS). By the end of this year, it aims to produce 80,000 wafers per month, increasing to 150,000 by 2028. This expansion is vital for TSMC’s biggest clients, including Apple, Nvidia, AMD, and large cloud providers who need custom chips.
The investment in advanced packaging in the U.S. indicates TSMC’s commitment to creating a more complete supply chain domestically.
During this transition, former President Trump proposed tariffs on semiconductors made outside the U.S., preferring tariffs to government subsidies in boosting domestic chip manufacturing. In contrast, the CHIPS and Science Act signed by President Biden in 2022 allocated $52 billion for semiconductor production, with $6.6 billion designated for TSMC and up to $5 billion in loans for its construction in Arizona.
Jack Gold, a principal analyst for J. Gold Associates, emphasized the positive impact on the U.S. economy from TSMC’s investment. The need for hiring technicians means increased employment and tax contributions, benefiting the economy overall.
Last month, Trump administration officials even suggested TSMC consider acquiring a controlling stake in Intel’s manufacturing operations, as Intel faces significant challenges, including job cuts, reduced spending, and leadership changes.
TSMC started investing in U.S. chip manufacturing back in 2020, initially committing $12 billion for an advanced semiconductor fabrication plant in Phoenix, a pledge made during Trump’s first term.