TSMC isn’t just growing its global footprint—it’s reshaping the conversation about where its future lies. With a new fab now active in Kaohsiung, the world’s top chipmaker is sending a message: Taiwan still matters, even as billions flow into American soil.
At a time when its Arizona investment has ballooned to USD 165 billion—including three fabrication plants, two packaging facilities, and a flagship R&D hub—TSMC has chosen to open yet another fab on its home turf.
The new facility is expected to generate around 7,000 local tech jobs and start mass-producing 2-nanometer chips in the second half of the year, according to a Reuters report. That kind of expansion, in this location, is hardly incidental. It’s strategic positioning—both industrial and political.
Taiwan First—But with a Global Strategy
The planned Kaohsiung fab is not a reactionary move, but a continuation of TSMC’s longstanding strategy to keep its most advanced chipmaking capabilities close to home. While the U.S. buildout dominates headlines, the company has maintained that its base in Taiwan isn’t going anywhere.
Only about 7% of TSMC’s total output is expected to come from U.S. plants when they’re fully operational.
In fact, TSMC’s Arizona facilities have already undergone major revisions. A planned advanced-node fab was dropped in favor of a high-performance packaging plant and additional R&D. Analyst Ming-Chi Kuo sees the change as a response to economic and policy conditions rather than an operational realignment.” For the company, it’s a balancing act—expand globally, but not at the cost of its stronghold in Asia.
What’s more, this expansion is taking place against a backdrop of rising geopolitical friction. In late March, the U.S. further tightened its export controls on AI chips and semiconductor tools going to China.
The goal: deny Beijing access to technologies that could fuel military and surveillance systems. These restrictions have already led TSMC to halt advanced chip orders from Chinese firms, aligning the company more closely with U.S. objectives.
U.S. Incentives, But at a Price
TSMC’s American expansion didn’t happen in a vacuum. The company secured USD 6.6 billion in CHIPS Act funding and up to USD 5 billion in federal loans to back its Arizona projects.
President Donald Trump formally announced the Arizona investment during a March press conference, aligning with Washington’s broader strategy to localize semiconductor production and secure supply chains.
But there’s a cost to building in America. Analysts estimate that U.S.-made chips will cost around 10% more than those produced in Taiwan, due to higher labor, regulatory, and infrastructure expenses, as reported by Barron’s.
Former Intel CEO Pat Gelsinger has also questioned whether foreign manufacturers, even with large footprints, can drive meaningful R&D on American soil. Without that, he argued, the U.S. might still fall short of achieving real technological leadership. Meanwhile, TSMC has negotiated CHIPS Act terms that allow it to collect subsidies without relinquishing control over production location or intellectual property.
The message is clear: TSMC will work with America, but on its own terms.
Arizona’s Race Against Time
TSMC’s Arizona site is expected to begin producing 4-nanometer chips, with plans to ramp up to 2-nanometer production by 2028. The construction effort is projected to create 40,000 construction jobs over the next four years, and is being pitched as the cornerstone of a new semiconductor economy in the American Southwest.
Still, delays and redesigns have cast a shadow over early expectations. Getting fabs built is one thing; achieving high-yield production on schedule is another. These complexities have slowed momentum, even as U.S. tech giants scramble for capacity to power massive AI workloads.
Nvidia, for instance, has pledged to spend “several hundred billion” dollars over the next four years to shift more of its manufacturing to the U.S. CEO Jensen Huang has emphasized the need for a domestic supply chain to support next-gen AI infrastructure, including the newly unveiled Blackwell Ultra AI Factory Platform. AMD is also reportedly deepening its ties with TSMC’s U.S. operations.
The Competitive Pressure Is Mounting
While TSMC executes at scale, rivals like Intel are still playing catch-up. The company’s long-delayed Ohio fab is now slated for 2030, despite receiving billions in federal subsidies. Intel’s 18A process node, which introduces RibbonFET and PowerVia technologies, is inching toward production, but questions remain about real-world yields and reliability.
Intel has also undergone a leadership shakeup, with Lip-Bu Tan stepping in as new CEO to steer the company through financial turbulence and operational misfires. Major clients like Nvidia and Broadcom are reportedly testing Intel’s new node, but no major partnerships have been confirmed. In contrast, TSMC is already building what Nvidia and AMD need today—and what they’ll need tomorrow.
The geopolitics of chipmaking adds yet another layer. China, having lost access to key Western technologies, is pursuing self-reliance. Huawei and SMIC managed to fabricate a 7nm chip using older DUV equipment, but that progress came at the expense of cost and efficiency. Meanwhile, Beijing has restricted exports of gallium and germanium—key elements for chip production—in retaliation for U.S. sanctions.
Maintaining Taiwan’s Central Role
TSMC’s reaffirmation of its Taiwan operations isn’t just about national pride or even operational reliability. It’s a message to customers, investors, and governments: the company can scale globally without diluting its technological lead or sacrificing control. The addition of seven more fabs in 2024 proved that Taiwan is not a backup plan. It’s still the center of the map.
As AI demand accelerates and policy pressure intensifies, chipmakers are being forced to pick sides, invest billions, and rethink logistics. For TSMC, the move is clear. Expand in the U.S., yes—but not at the expense of home.
