Buoyed by another blockbuster earnings report and fresh momentum from a new U.S.-Taiwan trade agreement, Taiwan Semiconductor Manufacturing Co. is pressing ahead with plans to significantly scale up its operations in Arizona. The world’s largest contract chipmaker is no longer just maintaining its presence in the U.S.—it is clearly positioning the country as a key pillar of its global manufacturing footprint, as TSMC signals expansion of its $165 billion U.S. investment.
Accelerating Spending to Meet AI Demand
TSMC has already committed $165 billion to the United States, aligning closely with Washington’s efforts to rebuild domestic semiconductor manufacturing. Now, executives say that figure is likely to grow as the company races to keep up with soaring demand for artificial intelligence chips.
Speaking with CNBC’s Emily Tan on Thursday, Chief Financial Officer Wendell Huang said the company plans to continue ramping up investment in Arizona, driven by long-term confidence in AI.
“We have strong conviction in the AI megatrend,” Huang said, explaining that TSMC is increasing capital expenditures not only to expand capacity in Taiwan and the U.S., but also to accelerate projects wherever possible to narrow supply gaps.
His comments followed remarks by Chief Executive Officer C.C. Wei during TSMC’s quarterly earnings call, where Wei revealed that the company recently acquired additional land in Arizona and intends to develop a large-scale “gigafab cluster” in the state.
Although TSMC did not disclose the exact cost of the new U.S. expansions, it forecast that capital spending in the coming year will rise by more than 30% at the midpoint compared with 2025.
Trade Deal Provides a Favorable Backdrop
The expansion comes as the U.S. and Taiwan finalized a trade agreement on Thursday that reduces tariffs on Taiwanese goods to 15% from 20%, without layering additional duties. Under the deal, Taiwanese companies pledged $250 billion in direct U.S. investments across semiconductors, AI, and related industries, alongside another $250 billion in credit guarantees aimed at strengthening supply chains.
The agreement also offers favorable treatment for chips, reinforcing efforts to reshore semiconductor manufacturing to the United States. U.S. Commerce Secretary Howard Lutnick told CNBC that the long-term goal is to relocate 40% of Taiwan’s semiconductor supply chain to U.S. soil.
Ahead of TSMC’s earnings and the trade announcement, The Wall Street Journal reported that the company had been planning a major Arizona expansion as part of broader trade negotiations. Huang, however, pushed back on that narrative.
“The trade deal is between two governments, and we are not part of the discussions,” he said, adding that TSMC’s U.S. investments are driven primarily by customer demand and operational progress, not trade talks.
Progress on the Ground in Arizona
TSMC’s renewed push follows tangible progress at its existing U.S. facility, which had previously faced delays and skepticism. According to company executives, the first Arizona fabrication plant has entered mass production and is now achieving yields and technology performance comparable to TSMC’s top facilities in Taiwan.
“That shows our manufacturing excellence can be replicated in the U.S.,” Huang said, calling the milestone meaningful both for the company and its customers.
While TSMC’s most advanced technologies will continue to be developed and scaled in Taiwan—where closer collaboration between research and manufacturing teams offers advantages—the outlook for U.S. operations has improved markedly. Profit margins in Taiwan remain higher, partly due to lower labor costs, but Arizona is quickly gaining strategic importance.
The company has already moved up the production timeline for its second Arizona plant to the second half of 2027. Construction on a third facility is accelerating this year, and permit applications are underway for a fourth plant, executives said during the earnings call.
Originally, TSMC planned to build six wafer fabrication plants, two advanced packaging facilities, and a research and development center on its first 1,100 acres in Arizona. As expansion ambitions grew, that land proved insufficient, prompting the purchase of an additional 900-acre parcel. Some facilities from the original plan will now be relocated to the new site, while the remaining space will be reserved for future flexibility.
Investors appeared encouraged by the developments, with TSMC shares rising more than 3% in Taipei trading on Friday.
