By Robbie Whelan and Amrith Ramkumar
TSMC's American moment has arrived.
For years, executives at Taiwan Semiconductor Manufacturing Co., the world's largest fabricator of advanced computer processors, have been discussing the need to expand operations beyond its namesake island. Twin desires to be closer to major customers such as Nvidia and Apple and to mitigate the looming geopolitical risk of an invasion by China were key factors cited in those discussions, according to people with knowledge of them.
In a sweeping trade deal between Taiwan and the Trump administration, they may have found an opportunity to accomplish those goals.
TSMC is planning a massive U.S. expansion, in which the company expects to spend tens of billions of dollars to build several new chip-fabrication factories, or fabs, in Arizona, bringing its total footprint in the state to about a dozen plants.
The Trump administration unveiled the deal Thursday under which Taiwan will commit to more than $250 billion in spending in the U.S. in return for the U.S. reducing tariffs on Taiwanese goods to 15%. The agreement includes another $250 billion in credit guarantees by Taiwan to drive additional investment in the U.S.
That sum includes the $165 billion TSMC has already committed for six new factories to make logic chips, which power advanced computing, and two more that will produce so-called packaging chips, which provide supporting functions.
Under the new deal, TSMC is expected to announce several more Arizona logic fabs and continue bringing more advanced capabilities to the U.S. The company said Thursday it plans up to $56 billion this year in capital expenditures.
The company is also planning a push into the United Arab Emirates that would likely require U.S. approval because of the U.A.E.'s close relationship with China, people familiar with the concept said. At the same time, TSMC is building its first fab in Germany. The company opened a factory in Japan in 2024.
The expansion and the investment commitments are signs of what regional experts say is the changing calculus facing both TSMC and the Taiwanese government when it comes to the geopolitics of the semiconductor industry and the opportunities afforded by the global artificial-intelligence boom.
The Trump and Biden administrations have prioritized bringing TSMC to the U.S. to develop domestic manufacturing capabilities. China is making strides toward making its own chips. And TSMC has emerged as a powerhouse with some of its own prerogatives distinct from those of Taiwan, which could have limited land and power available for future plants.
Taiwan's economic minister, Kung Ming-hsin, said Taiwanese chip makers need "a moderate global footprint" in response to "orders coming from local markets" but said Taiwan would remain the epicenter of chip production.
However, some analysts see a growing possibility that TSMC could have a large chunk of its advanced manufacturing outside Taiwan in the coming decades. That would potentially change the dynamics of the " Silicon Shield" -- the theory some analysts have put forth that TSMC and Taiwan's chip sector are so crucial to the global economy that China wouldn't invade and the U.S. would intervene if needed to protect the island.
Commerce Secretary Howard Lutnick suggested Taiwan's security rests not on its fabs but on America's favor: "Our president is the key to protecting their country, so they need to make him happy," he said in a Thursday CNBC interview.
"The Silicon Shield idea is fracturing in multiple different ways," said Sam Bresnick, a research fellow at Georgetown University's Center for Security and Emerging Technology. "People have to think about the TSMC equation differently."
Economic power
Founded in 1987 by former Texas Instruments executive Morris Chang, Taiwan's government and other partners, TSMC has emerged as the world's dominant manufacturer of high-performance processors, especially the chips used in AI data centers, cars and mobile devices designed by tech giants like Nvidia, Apple and Advanced Micro Devices. With a market value of about $1.7 trillion, it is the world's sixth-largest publicly listed company.
Over the years, TSMC's interests have become closely aligned with those of the Taiwanese government. Taipei helped finance the company's creation and is currently both its regulator and its largest shareholder, owning nearly 7% through the state-run National Development Fund.
The AI race between the U.S. and China has increased TSMC's importance to global tech supply chains and raised the stakes for Taiwan, which Beijing considers to be part of China. In November, Xi Jinping, who sees taking control of Taiwan as a key part of restoring China to great power status, signaled the start of a new pressure campaign on Taipei, stirring fears that he is considering taking the island by force.
Anticipating hostilities or other potential disruptions such as earthquakes, TSMC's leaders have for years been on the lookout for new sites. In the summer of 2019, members of the company's management committee traveled to the U.S. to evaluate potential expansions in New York, Texas, Arizona and Washington, according to people familiar with the matter.
The scouting trip led TSMC to build its first overseas fab that makes advanced chips in Arizona. The facility opened in late 2024, built in part using funds from the 2022 Chips and Science Act, and produces semiconductors for Nvidia, AMD and other customers.
Taiwanese critics of President Lai Ching-te's government have accused him of eroding the island's security by letting the U.S. take too much of TSMC's manufacturing capacity. Chinese authorities have piled on, with one official spokeswoman calling Lai a "professional at selling out Taiwan" and accusing him of handing over valuable technology as tribute to the U.S.
Other analysts are skeptical of the Silicon Shield theory, pointing out that the U.S. has long had many reasons to defend Taiwan, although officially it maintains ambiguity about its intentions. Chinese aggression would disrupt one of the busiest shipping corridors in the world. It would also increase the threat to Japan and South Korea, U.S. allies that each host tens of thousands of American troops.
Lai last year depicted the issue in similar fashion, saying the international community cares about Taiwan for regional stability. "That is the reason, and it has no direct connection with TSMC," Lai said.
Next-generation manufacturing
During Trump's first term, officials discussed subsidies for chip manufacturers such as TSMC to give the U.S. advanced capabilities. A chip shortage ensuing from supply chain disruptions brought on by the Covid-19 pandemic lent urgency to the Biden administration's discussions around the Chips Act, people familiar with them said. The stagnation of Intel, the largest U.S. chip maker, made TSMC's efforts more important.
While TSMC is expanding in Arizona, it has faced significant challenges there, among them the scarcity of water and workers with the right technical expertise.
Taiwan's trained talent pool and manufacturing ecosystem means there is little risk of it losing its primacy in semiconductor manufacturing to the U.S., said Jeremy Chih-Cheng Chang, head of the government-backed Research Institute for Democracy, Society, and Emerging Technology. Making the most advanced chips in the U.S. would be "extremely expensive and inefficient," Chang said.
C.C. Wei, TSMC's chief executive, said in late 2025 that the company was planning to accelerate plans to bring its most sophisticated technology, currently used only in Taiwan, to Arizona in response to customer demand. Around the time it is deployed, though, TSMC is expected to already be using next-generation capabilities in Taiwan.
The long timelines to bring factories online and the company's continuing expansion in Taiwan mean that the majority of its advanced production, design and research will likely remain there until at least the middle of the next decade, some analysts said.
"To get to a point where we say, 'Hey listen, we have credible incremental manufacturing outside Taiwan,' we're looking at 2030 or 2035," said Matt Seitz, who directs an AI initiative at the University of Wisconsin-Madison. "But to get to the point where you could actually absorb a meaningful shock to Taiwan without severe global shortages, you're looking at midcentury or later."
Write to Robbie Whelan at robbie.whelan@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
January 18, 2026 05:30 ET (10:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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