Taiwan Semiconductor Manufacturing Co. is advancing a US expansion plan that could add NT$3.14 trillion in investment, signaling a major shift in global chip production. Notably, the US expansion plan aligns with broader trade negotiations and strategic supply chain diversification. According to industry sources, the company may invest up to US$100 billion in additional American facilities. As a result, the project would rank among the largest overseas commitments in semiconductor history.
Under the proposal, TSMC would build four more wafer fabrication plants in the United States. In turn, executives expect expanded capacity to protect shipments from potential tariffs. Moreover, negotiators have crafted incentives to reduce trade barriers. For example, factories could import equipment tariff free up to 2.5 times planned capacity. Likewise, once operations begin, companies could export chips duty free up to 1.5 times output.
Meanwhile, Taiwanese semiconductor and technology firms have reportedly pledged NT$7.85 trillion in combined US investments. However, authorities have not released full terms of the arrangement. Therefore, analysts anticipate further clarity after high level diplomatic meetings in April. Subsequently, policymakers may finalize detailed commitments and compliance rules.
At the same time, US Commerce Secretary Howard Lutnick has pressed for relocating a larger share of Taiwan’s chip ecosystem. Specifically, he has called for 40 percent of supply chain capacity to shift to the United States. Consequently, analysts believe TSMC faces mounting strategic pressure. In that context, the company may need to anchor most of the pledged capital.
Currently, supply chain partners are expected to provide only NT$942.3 billion. By comparison, that amount falls far short of the overall target. Therefore, TSMC would likely bridge the funding gap. Indeed, this imbalance highlights the scale of the US expansion plan.
Nevertheless, cost challenges remain substantial. In the United States, labor and utility expenses exceed Taiwanese levels. Additionally, regulatory requirements add operational complexity. As a result, margins may tighten unless demand remains robust. Industry researcher Chai Huan-hsin said profitability will depend on long term scale and customer orders.
Furthermore, TSMC Chief Financial Officer Huang Ren-hao has expressed confidence in strong artificial intelligence chip demand. Accordingly, he projected capital spending between NT$1.63 trillion and NT$1.76 trillion this year. Even so, about three quarters of that budget will stay in Taiwan. Specifically, funds will support 2 nanometer production in Hsinchu and Kaohsiung. Later, the company plans 1.4 nanometer capacity in Taichung.
Meanwhile, TSMC continues expanding its Arizona facilities. When completed in the early 2030s, the site could produce roughly 30 percent of its most advanced chips. Even with the US expansion plan, analysts expect Taiwan to retain the majority of leading edge capacity.
Vice Premier Cheng Li-chiun has described the 40 percent relocation goal as unrealistic. Instead, she emphasized Taiwan’s integrated manufacturing ecosystem. Therefore, experts believe domestic operations will remain central to innovation.
Looking ahead, TSMC must balance geopolitical demands with financial discipline. Ultimately, executives will weigh tariffs, incentives, and global demand trends. Although the US expansion plan may deepen bilateral ties, Taiwan will likely remain the core production hub for years.
