Taiwan Semiconductor Manufacturing, the world’s largest contract chip maker, plans to build a manufacturing facility in Arizona as part of a victory for the White House, which is concerned about the lack of domestic capacity in the United States.
Two U.S. officials and a source close to the company said that TSMC – which makes chips for global tech brands from Apple to Huawei – plans to announce the move Thursday night in Washington time.
The Trump administration is increasingly concerned that the U.S. is too dependent on supply chains in Asia, especially as China improves its semiconductor manufacturing capabilities.
Eric Sayers, security expert in Asia and vice president of the Beacon Global Strategies consulting group, said that TSMC’s decision to build a manufacturing facility in Arizona was a critical development in that it underscored the intent of the Taiwanese company to “play a major role in the growth of an advanced microelectronic ecosystem” in the United States.
“Remaining the leader in this industry will be essential to future economic and military competitiveness,” said Sayers. “At the geopolitical level, I can’t think of a better big idea to link the United States and Taiwan together than working to ensure that the free world remains the leader.”
TSMC had long tried to resist pressure from Washington for a local manufacturing plant, or fab, arguing that it could only envisage such a step with government subsidies, because the absence of a supply cluster of manufacturing full chips in the United States would make production much more expensive. higher than in Taiwan.
But because the company controls half of the global custom chip market, the Trump administration has targeted it with the goal of restoring some of the domestic production of semiconductors needed by the defense industry.
The U.S. government is also focusing on TSMC in its efforts to slow or even halt China’s technological advances. Huawei, the Chinese telecommunications equipment maker that the United States claims is helping the Chinese government engage in cyber espionage, accounts for about 10% of TSMC’s revenue.
Washington recently pushed Taiwan to pressure TSMC to restrict its production of semiconductors for Huawei. Washington also fears that China may not take advantage of Taiwanese technology as it continues its own development of advanced semiconductors.
Taiwanese government officials have resisted US pressure to restrict TSMC and other Taiwanese companies from selling to China, as the country’s position as a global supplier is its strategic advantage.
“TSMC, in its negotiations with the United States government, must ensure that if they build a factory in the United States, they will not be limited in their ability to sell to other customers of their factories elsewhere, first and above all in Taiwan, “said Kung Ming-hsin, a cabinet minister in charge of the economy.
The Trump administration has explored ways to further restrict the Chinese tech sector, including toughening its existing sanctions against Huawei. Authorities want to limit companies that can sell to the Chinese telecommunications equipment maker more tightly, but have faced opposition from US chip makers, who rely on China for about a third of their revenues.
While TSMC’s decision to build the facility in the United States will be welcomed by the Trump administration, the president may also benefit from the decision to locate the plant in Arizona. The southwest state is considered a swing state in the November presidential election, and Republicans are also trying to avoid losing a Senate seat, in one of the races that will be essential in determining whether they keep their majority in the upper house.
The United States Department of Commerce did not immediately respond to a request for comment. TSMC declined to comment. The Wall Street Journal first reported the development.
Additional reporting by Kiran Stacey