Taiwan Semiconductor Manufacturing Co. is warning that proposed U.S. tariffs on imported chips could imperil its $165 billion investment in Arizona, threatening to derail one of the largest foreign direct investments in U.S. manufacturing. The chip giant's Arizona subsidiary sent a letter to the U.S. Department of Commerce on May 5 urging officials to keep semiconductor imports duty-free as the agency nears completion of its Section 232 investigation on trade threats.
The letter arrives amid political momentum for sweeping tariffs, with President Donald Trump suggesting duties as high as 100% on Taiwanese chips, accusing Taiwan of "stealing" American manufacturing. The Commerce Department's final determination is expected shortly after May 26.
TSMC, the world's largest contract chipmaker, is constructing six fabrication facilities in Phoenix. Three of those fabs are already under construction or operational, with three more-including two packaging plants and an R&D center-planned in a second phase. The company's Arizona footprint is expected to produce 100,000 wafers monthly, accounting for roughly 30% of TSMC's projected output of advanced 2-nanometer chips.
The company says its U.S. investment could generate $200 billion in economic activity and tens of thousands of jobs. But it warns that tariffs would increase costs for consumer products like smartphones and computers, depress demand, and strain already fragile supply chains-especially given the U.S.'s limited domestic production of critical chipmaking materials.
Meanwhile, TSMC is also accelerating its European footprint. On Tuesday, the company announced a new chip design center in Munich set to open in the third quarter of 2025. The facility, aimed at supporting advanced, energy-efficient chips for AI, automotive, industrial, and IoT applications, may eventually support Europe's efforts to develop AI processors using cutting-edge nodes.
"It's intended to support European customers in designing high-density, high-performance, and energy-efficient chips," Paul de Bot, President of TSMC Europe, said at the company's 2025 Technology Symposium.
TSMC is also co-investing €10 billion ($11.3 billion) alongside Infineon, NXP, and Bosch in a chip manufacturing plant in Dresden through the joint venture European Semiconductor Manufacturing Co. (ESMC). Kevin Zhang, a TSMC senior executive, confirmed the firm has held discussions with its partners about leveraging both the Dresden plant and the Munich design center to support AI chip production.
"We have to be on the ground right here closer," Zhang said. "We need to have people here to really directly engage with customers."
