Riding high on another impressive earnings report and a recent U.S.-Taiwan trade agreement, Taiwan Semiconductor Manufacturing Co. is set to expedite its multibillion-dollar growth in Arizona.
The largest contract chip manufacturer in the world has already pledged $165 billion in the U.S., aligning with the government’s initiative to reestablish local chip manufacturing. However, TSMC executives have indicated that expenditures will increase further as the company enhances capacity to fulfill demand for artificial intelligence chips.
During a conversation with CNBC’s Emily Tan on Thursday, TSMC Chief Financial Officer Wendell Huang mentioned that the company will keep boosting its investments in Arizona.
“We are very confident about the AI mega trend, which is why we are increasing capital expenditures to expand in Taiwan and in the U.S.,” Huang stated. “Not merely to grow, but also to accelerate whenever feasible to meet or reduce the gap.”
This statement came shortly after CEO C.C. Wei revealed during the company’s earnings call that TSMC had recently acquired additional property in Arizona and is looking to construct a “gigafab cluster” in the state.
While the company did not reveal the monetary value of its intended expansions in the U.S., it anticipates a capital expenditure increase of over 30% in the coming year compared to 2025.
Timing of the trade deal
The expansion in Arizona aligns with a U.S.-Taiwan trade accord signed on Thursday that reduces U.S. tariffs on Taiwanese products to 15%, down from 20%, without stacking on existing rates.
As part of the agreement, Taiwanese companies are set to invest $250 billion directly in the U.S. across semiconductors, AI, and related industries, as well as $250 billion in credit guarantees to bolster supply chains. The deal also affords special treatment for chips, aiding efforts to return manufacturing to the U.S.
It shows that our manufacturing excellence can be replicated in the U.S.Wendell HuangChief Financial Officer, TSMC
U.S. Commerce Secretary Howard Lutnick informed CNBC’s Brian Sullivan that the objective of the trade deal is to relocate 40% of Taiwan’s semiconductor supply chain to the U.S.
Prior to TSMC’s earnings announcement and the trade agreement, the Wall Street Journal reported that the Taiwanese chip behemoth had been strategizing a major expansion in Arizona as part of trade discussions between the U.S. and Taiwan, according to confidential sources.
Nonetheless, on Thursday, Huang refuted that its U.S. investment plans were directly connected to those trade negotiations.
“The [U.S.-Taiwan] trade deal is an agreement between two governments, and we are not involved in the discussions,” he stated.
“However, I will mention that we are proceeding with investment and accelerating our endeavors in Arizona due to customer demand, and we are indeed achieving significant progress with our [first fab] in Arizona being operational.
Progress in the U.S.
The push for expansion follows advancements at the current U.S. facility after years of setbacks and concerns.
According to executives, TSMC’s initial fabrication plant, which has already started mass production, is now manufacturing chips with yields and technology levels comparable to those of the company’s top facilities in Taiwan.
“It illustrates that our manufacturing excellence can be reproduced in the U.S. It’s essential for us, and it’s also highly significant for our customers,” Huang remarked.
However, he pointed out that the firm’s most advanced technologies will still be developed and scaled up in Taiwan, where TSMC benefits from the critical collaboration between its research teams and manufacturing operations.
Profit margins in Taiwan continue to be higher than in the U.S., partly due to lower labor costs.
Nevertheless, the company’s outlook in the U.S. has become more favorable. TSMC has expedited the production timeline for its second Arizona plant to the latter part of 2027, with construction on a third facility accelerating this year. It has also begun applying for permits for a fourth plant, as stated in its recent earnings call.
According to Huang, TSMC’s initial plan for its first 1,100 acres in Arizona consisted of six wafer fabrication plants, two advanced packaging plants, and a research and development center.
However, that land was found to be inadequate for the expansion strategies, leading to the acquisition of an additional 900-acre site. Parts of the initial plan will now be constructed on this second site, with the remaining land “reserved for future flexibility,” Huang noted.
TSMC shares were up more than 3% in Taipei on Friday.
