Taipei: If Taiwan Semiconductor Manufacturing Co. (TSMC) expands its investment in Arizona, it could establish dual production hubs in Taiwan and the United States, with the U.S. capacity nearly meeting local demand, an economist suggested.
According to Focus Taiwan, Liu Pei-chen, a researcher at the Taiwan Institute of Economic Research, was responding to a New York Times report indicating TSMC's potential to build more chip facilities in Arizona as part of a tariff agreement with the U.S. The report noted that TSMC might commit to constructing additional factories in the U.S. in return for a reduced tariff on imported goods from Taiwan, lowering the standard duty from 20 percent to 15 percent.
The report suggested TSMC's commitments could involve building new advanced wafer fabs, as well as IC packaging and testing facilities. Liu indicated that TSMC might expand its number of fabs in Arizona to six to eight, with a total monthly production capacity of at least 150,000 wafers, which would closely meet the demand for high-performance computing AI chips in the U.S.
Liu highlighted that such a move could be seen as a gamble for Taiwan, as TSMC is often regarded as a "silicon shield" due to the global demand for its advanced chips. If these chips were manufactured and packaged in the U.S., it might influence Washington's support for Taiwan in the face of potential threats from China.
In addition to wafer fabs, Liu suggested TSMC could establish more advanced IC assembly plants to offer sophisticated IC packaging services to clients, positioning the U.S. as a comprehensive semiconductor hub. A one-stop production model could cater to American clients like Nvidia Corp. and Advanced Micro Devices, Inc. (AMD), helping them mitigate risks amid geopolitical tensions.
Liu noted that a dual hub production model could emerge if TSMC expands in Arizona, shifting away from the current single hub model in Taiwan. However, this shift might introduce cost challenges due to high depreciation costs associated with U.S. production capacity and potential adjustments needed for Taiwan's fab utilization rates.
Currently, TSMC is investing $65 billion to build three advanced wafer fabs in Arizona, with the first expected to commence mass production in the fourth quarter of 2024. The structure for the second fab will be completed in 2025, with volume production slated for 2028. Groundbreaking for a third fab occurred in April 2025. In March 2025, TSMC committed an additional $100 billion for three more fabs, two IC assembly plants, and an R and D center.
Taiwan's government did not comment directly on the New York Times report, while TSMC remains in its quiet period ahead of its latest investor conference on Thursday.