Taiwan Semiconductor Manufacturing Company (TSM) is putting serious money into its Arizona expansion, but don't expect a massive reshuffling of advanced chipmaking to happen on President Donald Trump's timeline. The reality of building semiconductor fabs is proving more stubborn than political goals.
Economist Lien Hsien-ming, who leads the Chung-Hua Institution for Economic Research, threw some cold water on Washington's expectations this week. He estimates that less than 15% of Taiwan Semiconductor's cutting-edge manufacturing processes will actually make it to American soil by the time Trump's second term wraps up in 2029.
That assessment comes in response to some pretty bold talk from US Commerce Secretary Howard Lutnick, who told CNBC that the administration wants to move 40% of Taiwan's entire chip supply chain to the United States before the end of the decade. Lien's take? Current construction schedules make that target look highly unlikely, according to Focus Taiwan.
The Arizona Build-Out Reality
Here's what's actually happening on the ground. Taiwan Semiconductor is pouring $65 billion into building three fabrication plants in Arizona. Beyond that, the company has committed another $100 billion for three additional fabs, two IC assembly plants, and a research and development center somewhere in the US.
Lien noted that Taiwan Semiconductor has started installing equipment at its second Arizona fab, which should hit mass production in 2027. Construction on a third fab kicked off earlier this year. The company is also pursuing permits for a fourth facility, but Lien doesn't expect mass production at either the third or potential fourth fab to begin before Trump leaves office.
That's just how long it takes to build these incredibly complex facilities. You can't rush semiconductor manufacturing plants the way you might rush other construction projects.
Big Plans Despite the Timeline Crunch
Even with these timing constraints, Taiwan Semiconductor is moving forward with its Arizona mega-expansion to serve major customers like Nvidia Corp (NVDA). The company envisions a massive "gigafab cluster" as the centerpiece of its US strategy.
A fresh trade agreement between Taiwan and the Trump administration is helping grease the wheels. The deal cuts tariffs on Taiwanese goods to 15% and includes $250 billion in planned Taiwanese investment in the United States, backed by another $250 billion in credit guarantees.
Taiwan Semiconductor is clearly thinking long-term about its American presence. The chipmaker recently expanded its Arizona land holdings by 900 acres beyond the original 1,100-acre site, giving itself plenty of room to maneuver for future growth. That's the kind of move you make when you're planning to be somewhere for decades, not just a single presidential term.
TSM Price Action: Taiwan Semiconductor shares climbed 1.23% to $331.17 in premarket trading on Wednesday, moving closer to the stock's 52-week high of $351.33.
