Chip giant TSMC plans to build a ‘gigafab cluster’ in the US, with Taiwan committing to US$500 billion investment under a new trade deal
Taiwan has committed to driving hundreds of billions of dollars of extra investment into America’s chip industry as part of a US trade deal announced on Thursday, with the island’s biggest semiconductor producer already moving to buy more land in the US state of Arizona.
Taiwan Semiconductor Manufacturing Company (TSMC) – the world’s largest contract chipmaker – confirmed on Thursday that it had bought a second tract of land in Arizona. The 365-hectare (901-acre) plot nearly doubles the company’s footprint in the southern US state, according to local media reports.
The company – which pledged last year to invest an additional US$100 billion in the United States – will build at least five new semiconductor facilities in America as part of the newly announced trade deal, The New York Times reported, citing sources familiar with the matter.
The trade deal, announced by the US Department of Commerce on Thursday, will see America cut Taiwan’s baseline tariff rate from 20 per cent to 15 per cent, bringing the duties in line with those imposed on Japan and South Korea.
In return, Taiwan has pledged that its technology companies will invest US$250 billion in the US, with the Taiwanese government providing another US$250 billion of credit guarantees to help its firms create a “full semiconductor supply chain” in America.
TSMC’s chairman and chief executive, C C Wei, said on Thursday that the company had “finished a purchase” of a second tranche of land in Arizona to “scale up an independent gigafab cluster”.
The company’s US$100 billion commitment announced last March came after US President Donald Trump threatened to raise tariffs on Taiwan – long a chipmaking powerhouse – and urged Taiwanese firms to shift production to America.
On Thursday, TSMC confirmed it would allocate an unusually high US$52 billion to US$56 billion for capital expenditure in 2026, up from US$41 billion last year, an increase it attributed to rising chip demand from the artificial intelligence industry.
The company makes chips for a slew of global technology giants – including American icons such as Apple, Nvidia and Advanced Micro Devices (AMD) – and leads competitors in advanced chipmaking technology.
“Our plan will enable TSMC to scale up an independent gigafab cluster in Arizona to support the needs of our leading-edge customers in smartphones, AI and HPC (high-performance computing) applications,” Wei said.
China’s Ministry of Foreign Affairs voiced opposition to the US-Taiwan tariff deal on Friday.
“The Chinese side has consistently and firmly opposed any country that has diplomatic relations with China signing agreements that have sovereign implications or are of an official nature with the Taiwan region,” a ministry spokesman said, urging the US to abide by the “one-China principle” and the three China-US joint communiqués.
TSMC is unlikely to make its extra investments in the US within a set time frame, but will instead proceed with expansion plans gradually according to market demand, according to Sean Su, an independent tech analyst based in Taiwan.
The company is taking a “cautious and disciplined approach to capacity expansion at its US fabs”, the Taipei-based research firm Market Intelligence & Consulting Institute told the Post.
“Final capacity decisions will continue to be determined by market conditions,” the research firm said.
TSMC plans to move forward the start of “high-volume manufacturing” at one Arizona plant to the second half of 2027, and the company is applying for permits for another facility, Wei said on Thursday.
The company said its gross margin from overseas production is normally lower than that from Taiwan.
