TSMC to invest $100 billion in US chip production, seeking tariff relief

Taiwan Semiconductor Manufacturing Company (TSMC) announced on Monday that it would invest $100 billion in the US and increase its capacity in the country, aiming to appease President Donald Trump and ward off threats of tariffs on chip imports.

Trump, who held a press conference with TSMC CEO C.C. Wei, stated that the world’s largest chip manufacturer would invest “at least” $100 billion in its state-of-the-art chip production facilities in Arizona. Trump mentioned that this investment was in addition to the $65 billion TSMC had previously pledged to invest in the US.

“This will create hundreds of billions of dollars in economic activity and enhance America’s dominance in artificial intelligence and beyond,” Trump said, adding that the investment would create 20,000-25,000 jobs.

Wei confirmed that TSMC would build three more US chip factories in addition to the two it had previously committed to constructing, which are set to begin mass production this year. Wei also said they would establish two facilities for advanced packaging, a critical element of the production process that connects chips to enhance performance.

TSMC also plans to build a research and development center as part of its overall plan, which it described as “the single largest foreign direct investment in US history.”

This move is the latest by the business community directed at Trump, amidst his aggressive push to impose tariffs on companies that manufacture overseas for export to the US, with companies announcing measures to win the President’s favor.

Last week, Apple announced it would spend more than $500 billion in the US over the next four years. Trump said there were “numerous” other companies that wanted to announce they would increase their production in the country.

The President emphasized that TSMC was “way ahead of the game” by agreeing to produce more chips in the US, implying that the Taiwanese company could avoid tariffs, which he suggested could be as high as 50%.

“We will have to wait for additional details to assess what the impact of this investment will be on US chip production in the long term,” said Chris Miller, author of Chip War, noting that TSMC hopes the new investment will pave the way for a productive relationship with the administration.

During the presidential race and after taking office, Trump repeatedly threatened to impose tariffs on chip imports, which would have a dramatic impact on Taiwan’s economy.

Pressure on TSMC had been mounting for months following Trump’s accusations that Taiwan had “stolen” the US semiconductor industry. Speaking alongside Wei on Monday, the President said Taiwan had a “monopoly” on chips.

Tariffs would put TSMC under pressure from its American customers to absorb some of the resulting costs. However, TSMC’s bigger concern was that Trump might cancel a contract signed during the Biden administration, in which Washington agreed to support its facilities in the US with more than $6 billion in subsidies.

Commerce Secretary Howard Lutnick said at the press conference that TSMC was encouraged to invest $65 billion because of the subsidies, but added $100 billion thanks to Trump’s efforts to encourage chip production in the US.

Lutnick added, “[Companies] are coming here in massive numbers because they want to be in the world’s largest market and they want to avoid tariffs.”

The TSMC investment further expands its footprint in the US. During Trump’s first term, the group initially promised to build a factory using 5-nanometer technology, but later agreed to use the more advanced 4nm technology at the facility.

In 2024, TSMC reached an agreement with the Biden administration to build a second facility using 2nm technology by 2028 and to establish a third factory in the US by the end of this decade. The total expansion brought TSMC’s planned investment in Arizona to $65 billion.

Unlike its customers, such as Nvidia, which designs and markets chips, or Intel, which designs semiconductors but also manufactures some itself, TSMC only produces chips according to the designs of others.

This approach has allowed it to develop application skills in the increasingly complex production of state-of-the-art chips. TSMC holds more than 90% of the market in the production of the most advanced chips.

AMD CEO Lisa Su praised the work of the Trump administration and TSMC, saying the investment was “extremely important” for the US semiconductor industry and noted that TSMC would begin producing its highest-performance chips in the country later this year.

AMD is a major TSMC customer competing with Nvidia in the advanced artificial intelligence chip sector.

TSMC’s announcement, first reported by The Wall Street Journal, came after Trump administration officials made suggestions in recent weeks to significantly increase the group’s investments in the US to appease the president.

These proposals included TSMC helping to operate Intel’s factories, which lag behind its Taiwanese rival in state-of-the-art production.

According to people familiar with the matter, another idea was for TSMC to make a capital investment in Intel or for the Taiwanese chipmaker’s US operations to be spun off into a company in which the US government would also be a shareholder.