Taiwan Semiconductor Manufacturing, which has started producing the most advanced chips on U.S. soil in Phoenix, will expand its Arizona investment with a fresh $100 billion commitment here.
The landmark development, announced by President Donald Trump on March 3 in the White House, enhances Arizona’s status as a more important hub for advanced technologies, with implications for suppliers, universities and other businesses in the region. This will build on the $65 billion that TSMC already has staked here, the largest direct investment ever by a foreign corporation in the country.
Here’s a closer look at what the announcement might mean for Phoenix and the region.
How much does the $100B investment deepen TSMC’s commitment to Arizona?
It nearly triples it. After years of discussion, the company in 2020 announced it would build a factory or “fab” in north Phoenix. TSMC later increased its stake here to $40 billion, then to $65 billion, with three fabs planned. President Joe Biden visited the complex along the way. The new development would add three more fabs, raising the total to six, and augmenting the company’s total stake to $165 billion.
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Why did Phoenix succeed in attracting TSMC?
The company examined locations in other states but came away with the impression that local and state officials here would help them get the job done. Also, land was available, the region’s electricity capacity was solid and there were few natural disaster risks. It doesn’t hurt to have the nation’s largest engineering school, Arizona State University, nearby, though other universities, community colleges and workforce development programs will be involved. Several factors came together to help the effort.
Metro Phoenix already had a strong foundation in semiconductors, from companies including Motorola, Intel, Microchip Technology, ON Semiconductor and others.
Will all the fabs be clustered at the same complex in north Phoenix?
That hasn’t been announced yet, and a company spokesperson declined to provide details. The company’s facility near Dove Valley Road and Loop 303 encompasses 1,129 acres, so there is room.
The first TSMC factory in Phoenix has started commercial production of microchips — the most advanced made in America today. The second fab there is under construction, and ground hasn’t yet been broken on the third one, let alone the three new ones announced this week.
Are these realistic projections? Can TSMC deliver?
TSMC so far has expanded its Arizona commitment on three separate occasions, and the company is an industry leader that posted a profit of $35 billion in 2024, on revenue of $90 billion.
The company focuses on making semiconductors for other companies, not its own products. In the White House announcement, C.C. Wei, TSMC’s chairman and CEO, cited Apple, Nvidia, AMD and Broadcom among those key customers. He also cited support for artificial intelligence and smartphones.
Apple, incidentally, recently announced its own $500 billion advanced-technology investment in the U.S. that will include Arizona as a key destination.
Will TSMC be putting up its own money?
The company said yes, though it also could qualify for federal incentives such as a 25% tax credit for new semiconductor manufacturing that was included in the Chips and Science Act. Under that legislation, which was championed by President Biden but also garnered many votes from Republicans in Congress, TSMC qualified for $6.6 billion in federal grants plus low-cost loans.
How do policies under Trump differ from those under Biden?
You might see it as a carrots vs. sticks situation, where the CHIPS Act offered incentives through grants and low-cost loans, while tariffs represent more of a punitive measure, except for those foreign companies that shift manufacturing here.
TSMC officials for years have sensed a need to do that, but the heightened threat of tariffs, as Trump spelled out over his first few weeks in office, brought about a greater sense of urgency.
Not everyone has been enamored with tariffs, however. For example, the U.S. Chamber of Commerce is calling for the swift repeal of 25% tariffs now going into effect on most goods from Canada and Mexico, though not primarily on semiconductors.
How did the deal between Trump and TSMC come about?
Neither TSMC nor federal officials have discussed this. A White House press release said the historic investment was “secured” under Trump, so presumably, both sides were engaged in active discussions. But details were not forthcoming.
Does water scarcity in the desert present a problem?
TSMC hasn’t cited this as a major concern, partly because the company claims to be following extensive recycling processes. Electricity might be the bigger issue, especially with power-thirsty data centers and other manufacturers moving into the region, along with steady population growth. The amount of water needed by the first three fabs will equate to that used by about 14,000 single-family homes; the needs of the new plants haven’t been disclosed yet.
Local power utilities Salt River Project and Arizona Public Service, which supplies the TSMC complex, both are pursuing extensive capacity expansions. Critics project the first three fabs could use the equivalent of 300,000 homes, but TSMC claims that figure is exaggerated.
Why have semiconductors become so important?
These are the increasingly tiny devices that help to run most modern machinery. Consumer applications include cell phones, computers and vehicles, along with industrial machinery, utility equipment, medical devices and defense weapons.
Global semiconductor sales topped $600 billion for the first time last year, finishing at $628 billion, according to World Semiconductor Trade Statistics.
The U.S. already produces substantial quantities of semiconductors, making it a net export sector, but the country has lagged in making the most advanced chips. Trump has cited economic and national defense reasons for wanting to attract more investments like that of TSMC.
So the microchip industry is on a growth trajectory?
Yes, with global semiconductor sales climbing 19% last year, paced by relatively new applications such as artificial intelligence, autonomous vehicles and wireless communications. Those and other trends provide a favorable backdrop, though it’s important to note this is a cyclical business.
Weren’t Trump’s tariff threats part of the TSMC deal?
Yes. The company wants to avoid the tariffs President Trump has threatened — import taxes that would push up costs and presumably dampen demand. Chips made here, even by foreign entities, will avoid tariffs. In the White House press conference, Trump suggested tariffs on imported semiconductors could start at 25% and eventually go much higher.
What are the job possibilities behind the TSMC expansion?
The company hasn’t made an announcement on full-time employment, though it envisions 40,000 construction jobs tied to the $100 billion investment.
TSMC currently has roughly 3,000 permanent jobs in the Phoenix complex, climbing to 6,000 for the first three fabs. While the company clearly will need a lot of skilled employees including engineers and computer scientists, more than half of the positions won’t require four-year college degrees.
During the announcement, President Trump cited perhaps 25,000 jobs down the road, but it’s unclear if he was referring solely to direct employees, suppliers or more.
Will there be other jobs created at suppliers and elsewhere?
Yes. Each direct semiconductor job brings about 5.7 other positions at suppliers and related businesses.
Suppliers already have been moving to metro Phoenix, to be closer to the TSMC plant. These include Amkor Technology, which provides packaging services that protect and connect microchips to the ultimate products.
Another is Sun Chemical, a company that also set up operations near TSMC. Other suppliers include makers of specialized, expensive equipment and vacuum companies that remove the microscopic impurities that can ruin a batch of semiconductors.
All that’s in addition to new stores, apartments, homes and restaurants in the area, plus the various services the new employees will require.
What are Arizona leaders saying about the $100B TSMC announcement?
Most have been effusive in their enthusiasm. U.S. Sen. Mark Kelly called it “huge news for Arizona that officially cements our state as a global hub for building the most advanced microchips in the world.”
Phoenix Mayor Kate Gallego said the investment “will deliver a major win for American workers.”
Arizona Gov Katie Hobbs said the stake “cements Arizona as the epicenter of advanced chip manufacturing and innovation in America.”
Are there any new wrinkles to the TSMC announcement?
Yes. Aside from the massive $100 billion investment, the company plans to open two of its own packaging facilities in north Phoenix, along with a research and development center.
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