Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is positioning itself at the center of U.S.–Taiwan trade talks as Washington pushes to reshore advanced chip manufacturing.
Taiwan Semiconductor is preparing a major expansion of its Arizona operations as the Trump administration nears completion of a trade agreement with Taiwan that would lower tariffs and secure a significantly larger U.S. investment commitment from the chipmaker.
Officials have negotiated the deal for months, and it is now undergoing legal review and could be announced later this month.
Under the agreement, the U.S. would reduce tariffs on Taiwanese goods to 15%, aligning the rate with imports from Japan and South Korea, two U.S. allies that struck similar deals last year, the New York Times reported on Monday, citing sources familiar with the matter.
Another account of the talks said the U.S. would cut tariffs from the current 20% rate and that Taiwan would commit to more than $300 billion in foreign direct investment and related U.S. spending, the Wall Street Journal reported on Monday, citing sources familiar with the matter.
Arizona Expansion Plans
The total includes and builds on the $165 billion investment commitment Taiwan Semiconductor outlined last year.
As part of the expanded pledge, Taiwan Semiconductor would commit to building at least five additional semiconductor fabrication facilities in Arizona, roughly doubling its presence in the state, with broader plans that could bring its total footprint there to roughly a dozen facilities.
The new Arizona fabs would produce logic chips designed by customers such as Nvidia Corp. (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD) for artificial intelligence and advanced computing.
Taiwan Semiconductor has also committed to building two facilities that make semiconductor packaging chips, which provide supporting functions.
To support the planned buildout, Taiwan Semiconductor recently paid $197 million at a public auction to acquire 900 acres adjacent to its existing Arizona site.
Taiwan Semiconductor already operates a chip plant near Phoenix that opened in late 2024.
U.S. Industrial Policy And Global Trade Context
The proposed trade pact fits into a broader Trump administration strategy that followed the announcement of tariffs on dozens of trading partners in April.
Since then, the administration has sought to reduce tariff rates in exchange for investment pledges tied to U.S. national security and industrial priorities.
South Korea and Japan have pledged hundreds of billions of dollars toward U.S. projects.
Taiwan Semiconductor's Arizona push has also benefited from billions of dollars in federal subsidies under the 2022 Chips and Science Act.
The chipmaker has built one semiconductor plant in Arizona since 2020, is finishing a second facility scheduled to open in 2028, and has committed to constructing four additional plants in the coming years.
Strategic Importance Of U.S. Manufacturing
The talks come as potential U.S. tariffs on chips threaten both Taiwan and Taiwan Semiconductor.
Taiwan Semiconductor is accelerating U.S. chip manufacturing as demand from American customers drives a growing share of its business and elevates the strategic importance of domestic production.
Revenue from U.S. clients now accounts for more than 75% of total sales.
By expanding capacity on U.S. soil, Taiwan Semiconductor is deepening ties with key customers like Nvidia and Apple Inc. (NASDAQ:AAPL).
TSM Price Action: Taiwan Semiconductor shares were up 0.14% at $332.22 during premarket trading on Tuesday. The stock is trading near its 52-week high of $333.55, according to Benzinga Pro data.
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