TSMC Makes a $40 Billion Bet on U.S.-Made Chips. Don’t Declare Victory Yet.

This past Tuesday,


Taiwan Semiconductor Manufacturing


announced that it would expand its investments in Arizona to more than $40 billion—from its initial $12 billion commitment. TSMC’s first Arizona fab will begin making 4-nanometer chips in 2024, and a second will produce 3-nanometer chips by 2026. Smaller chips normally are faster and more power-efficient than larger ones.

Forty billion is a big number, but it’s not a panacea. TSMC didn’t lay out a time frame to spend the money. And it will be a fraction of TSMC’s overall capital spending, which


J.P. Morgan


estimates at $100 billion from 2022 to 2024. The fabs will add to U.S. capacity, but with limitations. Taiwan has become a geopolitical flashpoint with China and the U.S. because it accounts for more than 90% of the world’s most advanced chip manufacturing, notes a 2021 report from the Semiconductor Industry Association and Boston Consulting Group. Most of that comes from TSMC.