More TSMC investment in US would mean dual production hubs: Economist

Taipei, Jan. 13 (CNA) If Taiwan Semiconductor Manufacturing Co. (TSMC) increases its investment in Arizona, it will likely operate dual production hubs in Taiwan and the United States, with U.S. capacity nearly sufficient to meet local demand, an economist said Tuesday.

Liu Pei-chen (劉佩真), a researcher at the Taiwan Institute of Economic Research (TIER), was responding to a New York Times report which said TSMC could build more chip facilities in Arizona as part of a tariff deal with the U.S.

The article said TSMC would commit to building more factories in the U.S. in exchange for a reduction in the standard duty imposed on imported goods from Taiwan from 20 percent to 15 percent.

Though the article seemed to refer to TSMC commitments to build additional semiconductor wafer capacity, Liu told CNA that the chipmaker could build new advanced wafer fabs as well as IC packaging and testing facilities as part of the arrangement.

Liu said the number of TSMC's fabs in Arizona would likely to rise to six to eight in Arizona, with total monthly production capacity of no less than 150,000 wafers, a quantity she said would come close to meeting the demand for high-performance computing AI chips in the U.S.

That would be considered a gamble for Taiwan, given that many in the country believe TSMC offers the country a "silicon shield" because of the need countries like the U.S. have for TSMC's advanced chips.

Should those chips all be made and packaged in the U.S., Washington might be less likely to support Taiwan in deterring a potential attack by China, which claims Taiwan as its territory and has vowed to annex it, by force if necessary.

In addition to wafer fabs, Liu said TSMC could build more advanced IC assembly plants to provide advanced 3D chip on wafer on substrate (CoWoS) and system-on-integrated-chips (SOIC) IC packaging services to its clients, establishing the U.S. as a complete semiconductor hub.

She said a one-stop comprehensive production model in which TSMC rolls out chips and provide assembly services would meet demand from its American clients such as Nvidia Corp. and Advanced Micro Devices, Inc. (AMD) to lower their risks at a time of geopolitical unease.

"If TSMC builds new wafer fabs in Arizona, a dual hub production model will take shape, gradually moving away from the current model of a single hub in Taiwan," Liu said.

Under the model, however, costs could become an issue, Liu cautioned.

She said TSMC faces extremely high depreciation costs due to the high expense of building production capacity in the U.S., and it would also have to adjust the utilization rates of its fabs in Taiwan, which could affect the company's bottom line.

Currently, TSMC is investing US$65 billion to put up three advanced wafer fabs in Arizona, with the first starting mass production in the fourth quarter of 2024.

The structure for the second fab was completed in 2025, with volume production targeted for 2028. Ground was broken on a third fab in April 2025.

In March 2025, TSMC pledged to invest additional US$100 billion to build three more fabs, two IC assembly plants and a R&D center.

Taiwan's government would not comment directly on the New York Times report, while TSMC has been in its quiet period before its latest investor conference Thursday.