Trump and TSMC announce US$100 billion plan to build five new US factories

WASHINGTON: Taiwan semiconductor company TSMC plans to make a fresh US$100 billion investment in the United States that involves building five additional chip facilities there in coming years, its CEO announced with President Donald Trump on Monday (Mar 3).

Taiwan's dominant position as a maker of chips used in technology from cellphones and cars to fighter jets has sparked concerns of over-reliance on the island, especially as China ramps up pressure to assert its sovereignty claims.

Taiwan Semiconductor Manufacturing Co, the world's largest contract chipmaker and a leading supplier to major US hardware manufacturers, unveiled the plan as Chief Executive CC Wei met Trump at the White House.

"We must be able to build the chips and semiconductors that we need right here," Trump said. "It's a matter of national security for us."

TSMC said the expansion included plans for three new chip fabrication plants, two advanced packaging facilities and a major research and development centre.

The outlay of US$100 billion to boost domestic production and make the United States less reliant on semiconductors made in Asia, follows news last April that TSMC aims to expand planned US investment by US$25 billion to US$65 billion and add a third Arizona factory by 2030.

TSMC did not give a timeframe for any of its new investments, apart from saying the effort would add 40,000 construction jobs over the next four years.

Construction on its first Arizona plant was plagued by delays, with the company eventually starting chip production in 2024 at a higher cost than at its facilities in Taiwan.

The company's Taiwan-listed shares fell 2 per cent on Tuesday.

"Higher costs are definitely a concern for TSMC," said Andrew Tsai, chairman of Taiwan consulting firm Capital Investment Management Corp.

As a key manufacturing partner to Nvidia, Qualcomm and Advanced Micro Devices, TSMC is central to the US chip industry, and bringing more of its production to US soil would solve a major supply chain risk for those firms.

The Taiwan company could also play a central role in saving rival Intel.

Trump administration officials met Wei in New York this year about taking a majority stake in a joint venture in Intel's factory unit, as part of a deal for several chip firms to take a stake in the venture, a source familiar with the matter said.

Intel did not respond to questions about the meetings.

For Trump, the announcement helps show voters he is fulfilling his campaign pledge to do more to bolster domestic industries and create jobs.

It is the latest in a string of such developments.

In February, Apple said it would invest US$500 billion in the next four years, although much of that was routine spending. Emirati billionaire Hussain Sajwani and SoftBank have also promised multi-billion dollar investments in the United States.

On Monday, TSMC said it looked "forward to discussing our shared vision for innovation and growth in the semiconductor industry, as well as exploring ways to bolster the technology sector along with our customers."

Taiwan's cabinet said on Tuesday it would review the investment in line with its laws, which require government approval for any large overseas investment by a Taiwan company, but that it viewed overseas investments that would raise Taiwan's overall competitiveness positively.

In addition, Taiwan's presidential office said its review would also consider the interests of the investors and Taiwan.

"This ensures that while TSMC expands its investment in the US, the most advanced processes will remain in Taiwan," said Karen Kuo, a spokesperson for the Presidential Office.

TSMC did not say what technology it would use in those facilities.

Last year the company agreed to produce the world's most advanced 2-nanometer technology at its second Arizona factory, expected to begin production in 2028.

TSMC also agreed to use its most advanced chip making technology, called "A16", in Arizona.

CHIPS ACT

The first Trump administration brought TSMC to Arizona in 2019 and introduced legislation that later became the CHIPS and Science Act, passed in 2022 under President Joe Biden to provide US$52.7 billion in subsidies for American semiconductor production and research.

Last year, the US commerce department finalised a US$6.6-billion government subsidy for TSMC to produce semiconductors in Phoenix, Arizona, while the US$100 billion unveiled on Monday would be eligible for a 25 per cent manufacturing investment tax credit under the 2022 law.

Under Biden, the commerce department convinced all five leading-edge global semiconductor firms to locate factories in the United States in the effort to tackle national security risks from imported chips.

China claims Taiwan as its territory, but the democratically elected government in Taipei rejects Beijing's sovereignty claims.

On Monday, Commerce Secretary Howard Lutnick said TSMC and other companies were investing in the United States as they sought to avoid Trump's new tariffs.

Lutnick told lawmakers in January that the Biden-era program was "an excellent down payment" to rebuild the sector, but he has declined to commit to grants approved under Biden, saying he wanted to "read them and analyze them and understand them."

Last month, a TSMC spokesperson said the company had received US$1.5 billion in CHIPS Act money before the new administration came in, according to the terms of its agreement.