TSMC, the world’s largest semiconductor manufacturer, is sounding the alarm over proposed U.S. tariffs that it says could jeopardize its massive $165 billion investment in Arizona. The company is urging the U.S. Department of Commerce to maintain duty-free access for chip imports, warning that the tariffs could disrupt supply chains and derail its ambitious expansion plans.
In a formal letter dated May 5, TSMC’s Arizona subsidiary argued against potential Section 232 tariffs on imported semiconductors. The company has already committed $65 billion to build three wafer fabrication plants in Phoenix—one of which is operational, another nearly complete, and the third recently launched. An additional $100 billion has been pledged for three more fabs, two advanced packaging facilities, and a research and development center, bringing the total Arizona investment to $165 billion.
“New import restrictions could jeopardize current U.S. leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the U.S., including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the U.S. Department of Commerce.
Once all six fabrication plants are online, TSMC projects Arizona will produce 100,000 wafers per month, representing roughly 30% of its future capacity for cutting-edge 2-nanometer and smaller chips. The economic ripple effect could be enormous, with estimates of $200 billion in economic activity and tens of thousands of new jobs.
But that vision now faces a serious threat.
TSMC warns that imposing steep tariffs—up to 100%—could significantly increase costs for consumer electronics such as smartphones and laptops, reducing demand for chips and undermining the viability of its Arizona operations. The company also noted that many of the specialized materials and tools required for advanced chipmaking are not manufactured in the U.S., making global imports critical to its success.
The letter comes as the Department of Commerce prepares to release findings from its Section 232 investigation, expected shortly after May 26. The proposed tariffs have gained momentum amid political rhetoric, including comments from former President Donald Trump, who has accused Taiwan of “stealing” American business and suggested severe tariffs on Taiwanese chip imports.
TSMC’s message is clear: without duty-free access to critical imports, its Arizona expansion—and broader U.S. ambitions to rebuild domestic semiconductor manufacturing—could be in jeopardy. As the Biden administration weighs trade protectionism against national tech competitiveness, the future of American chipmaking may hang in the balance.
TSMC is currently investing $65 billion to build three advanced semiconductor fabrication plants in Arizona. The first fab has already begun mass production, the second is nearing completion, and construction recently began on the third.
In March, the chip giant announced an additional $100 billion commitment over the next few years. This expanded plan includes three more wafer fabs, two advanced packaging and testing facilities, and an R&D center—bringing TSMC’s total investment in Arizona to $165 billion.
In a letter submitted to the U.S. Department of Commerce, TSMC emphasized that the success of its Arizona operations hinges on growing demand from leading American clients. However, the company warned that proposed tariffs could have the opposite effect.
“Tariffs that increase the cost of end products will reduce consumer demand, and by extension, demand for the semiconductor components they rely on,” the letter stated. TSMC urged that any import measures stemming from the ongoing investigation exclude downstream and semi-finished products containing chips.
The company also stressed that many critical materials and semiconductor manufacturing tools are not available domestically in the U.S. “Efforts to develop a domestic chip ecosystem, such as our Arizona project, depend on stable access to these global supply chain inputs,” TSMC said.
To avoid disrupting progress, TSMC called for any tariffs or restrictions to be phased in gradually. It specifically asked for continued duty-free access to essential imports, especially from long-established partners, where local alternatives are currently unavailable or require time to develop.
Once fully operational, TSMC Arizona is expected to produce 100,000 wafers per month, qualifying it as a “GIGAFAB” cluster. The facility will represent roughly 30% of TSMC’s total future output for cutting-edge 2-nanometer and more advanced chips.
This warning comes amid escalating trade rhetoric. Former President Donald Trump has floated the idea of imposing tariffs of up to 100% on Taiwanese semiconductors, accusing Taiwan of having “stolen” U.S. chip dominance. Though his administration has mentioned negotiating exemptions, recent comments suggest they may simply announce rates without finalizing deals.
TSMC’s message to Washington is clear: safeguarding its investment and America’s chipmaking future requires policy that supports—not hinders—global supply chain continuity.
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