Taiwan Semiconductor Manufacturing Company (TSMC) is strengthening its U.S. presence with a $100 billion investment to expand its Arizona semiconductor facilities.
The move announced by US President Donald Trump during a press conference Monday, aligns with U.S. semiconductor policy under the CHIPS Act, but it does not signal a shift in global production. TSMC’s U.S. operations will contribute only about 7% of its total output, ensuring that Taiwan remains the company’s primary manufacturing hub for advanced chips.
The Taiwanese government has endorsed the expansion, countering speculation that Washington is trying to relocate critical semiconductor production away from the island.
Meanwhile, TSMC has successfully negotiated favorable terms with the Trump administration, allowing it to benefit from CHIPS Act funding while avoiding the strictest localization demands.
TSMC Modifies Arizona Expansion Plans Amid Policy Changes
The Arizona expansion has been revised, with one advanced-node fabrication plant being scrapped in favor of an advanced packaging facility. The change reflects the growing importance of chip packaging technologies, which integrate multiple semiconductor components into a single module for improved performance and energy efficiency.
Technology analyst Ming-Chi Kuo described the shift as a response to economic and policy conditions rather than an operational realignment.
“TSMC’s newly announced US investment plan, unveiled on March 4, 2025, differs from the original by adding $100 billion, cutting one advanced-node fab, and including an extra advanced packaging plant and R&D center,” he stated.
While the fabrication of the most advanced chips will remain in Taiwan, the Arizona site will focus on high-performance semiconductor packaging, supporting AI and cloud computing advancements.
Intel’s Setbacks Reinforce TSMC’s Growing Influence
As TSMC moves forward with its U.S. expansion, Intel continues to face obstacles in its efforts to rebuild domestic semiconductor leadership.
The company’s $28 billion Ohio chip factory, originally expected to start operations in 2025, has been delayed until at least 2030, despite receiving $8 billion in CHIPS Act funding.
The delays highlight Intel’s ongoing production challenges and raise questions about whether federal subsidies alone can accelerate U.S. semiconductor manufacturing.
The setbacks further solidify TSMC’s role in supplying critical chips to American companies, even as Washington attempts to reduce reliance on foreign manufacturers.
U.S.-China Trade Policies Reshape TSMC’s Strategy
Geopolitical tensions are also influencing TSMC’s positioning. In late 2024, the company halted advanced chip orders for Chinese clients following U.S. export restrictions targeting high-performance semiconductor sales. This decision effectively cut off firms like Huawei from TSMC’s most advanced chips, aligning the company more closely with U.S. policy objectives.
As trade barriers between the U.S. and China increase, American companies are diversifying their supply chains to mitigate potential disruptions. TSMC’s Arizona facility provides an additional production base, but Taiwan remains the central hub for leading-edge semiconductor manufacturing.
Apple and OpenAI Push for More Favorable U.S. Semiconductor Policies
While TSMC solidifies its role in U.S. semiconductor production, other tech giants are working to secure their own strategic advantages. Apple is seeking $500 billion in AI and semiconductor investments, but the company has delayed committing fully while negotiating CHIPS Act funding, tax incentives, and policy flexibility.
Apple’s discussions with the Trump administration focus on securing tax breaks for repatriated foreign earnings and exemptions from AI-related regulatory constraints.
The company is also seeking long-term assurances regarding semiconductor supply chain stability as it reduces reliance on Chinese manufacturers. According to Bloomberg, these policy negotiations could determine whether Apple follows through on its planned investment in U.S. semiconductor infrastructure.
Meanwhile, OpenAI, SoftBank, and Oracle have committed to the Stargate AI Project, a $500 billion initiative aimed at building independent AI infrastructure in the U.S. With AI models requiring exponentially more processing power, the need for specialized semiconductor production is growing, further increasing pressure on TSMC’s U.S. operations.
AI-Driven Semiconductor Demand is Reshaping the Industry
The rise of artificial intelligence is accelerating demand for advanced chips, with GPUs and AI accelerators now a critical focus for semiconductor manufacturers. Companies deploying large-scale AI models need chips that go beyond conventional processors, pushing firms like TSMC and NVIDIA to develop more efficient AI-specific architectures.
As AI companies look beyond existing cloud service providers, demand for new semiconductor production capacity is increasing.
TSMC’s Arizona advanced packaging facility is expected to play a role in producing high-performance AI chips, reinforcing the company’s strategic importance in this rapidly evolving sector.
Trump Administration’s CHIPS Act Revisions Pressure Semiconductor Firms
As semiconductor investments grow, the Trump administration is refining the CHIPS Act to prioritize domestic production.
Proposed revisions include increased transparency requirements and restrictions on outsourcing, particularly targeting firms that continue relying on Taiwan for high-end chip manufacturing.
Intel has already come under scrutiny for outsourcing part of its processor manufacturing to TSMC in Taiwan, raising concerns about whether federal funding should support companies still dependent on non-U.S. production facilities.
The policy adjustments could force semiconductor firms to reassess their strategies, especially as political pressure mounts to increase domestic manufacturing.
TSMC Expands U.S. Operations Without Undermining Taiwan’s Role
TSMC’s $100 billion expansion in Arizona cements its position as a key player in U.S. semiconductor supply chains, but it does not represent a broader relocation away from Taiwan.
The company has successfully balanced U.S. policy demands while ensuring its most advanced chip production remains in its home country.
With Intel struggling to meet production goals, Apple and OpenAI negotiating investment terms, and CHIPS Act regulations tightening, TSMC remains at the center of a shifting semiconductor landscape.
While its Arizona facilities provide an additional buffer against supply chain disruptions, TSMC continues to lead the industry, reinforcing its global importance in semiconductor manufacturing.
