The Taiwan Semiconductor Manufacturing Company (TSMC) broke ground Tuesday on its third factory in Arizona, widening the Trump administration’s push to yank critical chip production out of China’s shadow, according to the Department of Commerce.
The new fab — backed by some $6.6 billion in CHIPS Act grants and part of a broader $100 billion expansion pledge TSMC made in March — is slated to provide thousands of local jobs and anchor a domestic supply chain for everything from smartphones to fighter jet avionics, according to a TSMC press release.
“It’s the key,” Commerce Secretary Howard Lutnick said of domestic chip manufacturing’s national security implications in an interview with CNBC. “If we don’t produce semiconductors, we can’t make drones to protect ourselves. We can’t make fighter jets to protect ourselves. We can’t do anything unless we’ve got sufficient chips … It’s time for America to take care of itself, and that’s what we’re here to do.”
Trump officials like Lutnick see the desert campus — now slated to house three advanced plants by 2030 — as insurance against a Taiwan Strait crisis that could choke off roughly 92% of the world’s cutting-edge chips, according to the Commerce Department. The administration’s message to the industry is blunt: build here or face steeper tariffs.
“[TSMC] didn’t commit to the extra $100 billion, which is basically six more plants here, without the tariffs. They never would have done it,” Lutnick said. “They got paid $6 billion by Biden to build $65 billion worth of plants, and they were done and dusted. Then we came in and said ‘more.’ Much bigger, much bigger, much bigger. And they went an extra $100 billion, which is the largest single foreign direct investment ever made in the United States of America.”
TSMC’s Phoenix footprint began with a 2020 commitment worth $12 billion. The first line started limited production in December; the second fab is underway and should come online before 2028, the company said. The third facility, the Commerce Department said in a press release, will turn out the wafer-thin brains that power artificial intelligence servers, next-gen smartphones, and future weapons systems. Combined, the trio promises about 40,000 construction jobs, thousands of high-tech positions, and an estimated $200 billion in statewide economic activity over the next decade, the TSMC press release states.
Big customers are already lining up. Apple, Nvidia, and AMD have each signaled they will source American-made chips from Phoenix, betting on proximity to shore up their own supply lines as demand for AI hardware explodes.
Intel, Samsung, and Micron previously followed the same playbook with new fab expansions in Ohio, Texas, and New York, respectively, underscoring a bipartisan consensus that the U.S. can no longer rely on offshore hubs for strategically critical technology.
TSMC said if it remains on schedule, the first chips from the new line will roll out before the decade’s end, giving America its strongest foothold in bleeding-edge manufacturing in decades — and putting a vital piece of the digital world beyond Beijing’s reach.
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