Taiwan Semiconductor Manufacturing Co.'s push to build many more chip factories in Arizona accelerated after a new trade deal between Taiwan and the Trump administration.
The deal would cut U.S. tariffs on Taiwanese goods to 15% in exchange for more than $250 billion in U.S. spending commitments, a shift that signals Washington's use of trade leverage to pull critical semiconductor capacity onto U.S. soil as China's pressure and the artificial-intelligence boom raise the stakes.
For decades, TSMC's dominance in advanced chips has been central to what analysts often call Taiwan's "silicon shield," the idea that the island's importance to global supply chains helps deter conflict and strengthens the case for U.S. support in a crisis.
The company is now laying out a future with more production outside Taiwan, driven by customer pull and rising geopolitical risk.
TSMC plans to spend tens of billions of dollars to build several new chip fabrication plants in Arizona, bringing its total footprint there to roughly a dozen facilities, according to people familiar with the company's planning cited by The Wall Street Journal.
The company said Thursday it plans capital expenditures of up to $56 billion this year.
The broader trade agreement was unveiled Thursday, with Taiwan committing to more than $250 billion in spending in the U.S. in return for reduced tariffs on goods to 15%, Reuters reported.
The agreement also includes $250 billion in credit support from Taiwan to drive the additional U.S. investment.
The investment total includes the $165 billion TSMC has already committed for six new factories to make logic chips and two more facilities for advanced packaging, and the company is expected to announce several additional Arizona logic fabs under the new framework.
Commerce Secretary Howard Lutnick framed the deal in blunt geopolitical terms, saying in a Thursday CNBC interview: "Our president is the key to protecting their country, so they need to make him happy," he said.
Taiwan's government has argued that offshore investment does not mean hollowing out the island's industrial base.
Taiwan's economic minister, Kung Ming-hsin, said Taiwanese chip makers need "a moderate global footprint" to respond to "orders coming from local markets," but Taiwan would remain the epicenter of chip production.
TSMC is also weighing expansion into the United Arab Emirates, which would likely require U.S. approval because of the UAE's close ties to China, according to people familiar with the concept cited by the Journal.
The company is also building its first factory in Germany and opened a factory in Japan in 2024.
Some analysts say the "silicon shield" concept is weakening as capacity spreads.
"The silicon shield idea is fracturing in multiple different ways," said Sam Bresnick, a research fellow at Georgetown University's Center for Security and Emerging Technology. "People have to think about the TSMC equation differently."
Jim Thomas ✉
Jim Thomas is a writer based in Indiana. He holds a bachelor's degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.
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