TSMC is forced to invest an additional $10 billion in microchip production in the United States under an agreement with the country’s government and Taiwan

Brief Summary

Over the past month, the United States and Taiwan signed an agreement that requires the island to invest a minimum of $250 million in the U.S. economy. In return, Taiwan retains its customs duties (15%) and receives import incentives for chips produced in Taiwan for American companies. Experts estimate that most of the investment will be directed specifically at TSMC – Taiwan’s largest chip manufacturer.

1. What the agreement includes
Item Description Taiwan Investment Minimum $250 million in the U.S. Customs duties Retained at 15% Chip import incentives Prefential terms for American firms using Taiwanese chips
Key feature: almost all financial flows will go to TSMC, as the company already earns about 75% of its revenue in North America.

2. Why TSMC will be in focus
* Capital expenditures over the last three years – more than $101 million worldwide.
* Under the agreement, TSMC must invest more than this amount in localizing chip production in the U.S.
* Planned spend: up to $165 million, of which $100 million is already accounted for from TSMC (according to Trade Minister Howard Lutnick).
* The remaining $65–70 million are obligations to other Taiwanese companies and suppliers.

3. Planned investments and infrastructure
Investment Purpose $100 million from TSMC New chip plant construction in the U.S. $30 million for suppliers Set up production sites with partners $20 million from Foxconn and others Expand presence of Taiwanese firms in the U.S.
Construction strategy
* Six wafer fabrication plants, two testing/packaging facilities, one research center – already planned.
* According to SemiAnalysis: by 2032 the first six facilities in Arizona will be fully operational and allow TSMC to import chips duty‑free.
* After 2032 another four factories are needed to cover all import incentives.
* Construction expected to begin by 2035.

Location
* In Arizona, TSMC already has two sites: one with a fully functioning plant, the second almost finished.
* A third site is only in the construction phase.

4. Challenges and uncertainties
1. The exact layout for localizing chip production is not yet specified in the agreement; TSMC may face additional U.S. requirements.
2. Political sensitivity: the Taiwan issue remains a hot topic in relations with China, so deal details may stay hidden until Trump’s April visit to Xi Jinping.
3. Unrealistic expectations: Taiwanese officials and TSMC representatives believe that reaching 40% production in the U.S. by the end of Trump’s second term is too ambitious.

5. Conclusions
* The U.S.–Taiwan agreement creates significant financial obligations for TSMC while opening access to import incentives and retained duties.
* The company already plans large investments in Arizona, but implementation details remain unclear due to political tension with China.
* In the coming years, the key factor will be TSMC’s ability to successfully execute its plant construction program and deliver the required production volume to meet the agreement’s requirements.