Warning from TSMC TSMC Questions Arizona Investments Should the U.S. Stick to Tariff Plans

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According to reports, the U.S. Department of Commerce received a letter on May 5, 2025, from TSMC. The politely-worded yet firm message: Import restrictions and tariffs endanger demand—and the company's investment plans in Arizona.

TSMC gave the U.S. government a polite but firm warning in early May 2025, as the company confirmed to the editorial team of Focus Taiwan, without going into detail about the contents of the letter to the Department of Commerce. This letter was sent in response to a call for comments regarding possible tariffs on semiconductor imports by the Trump administration.

The U.S. government had initiated an investigation under Section 232 of the Trade Expansion Act of 1962, which allows the President of the USA to adjust imports if they are considered a threat or impairment to national security. Since his inauguration, President Trump has been causing planning uncertainties in companies around the globe with the possible announcement of tariffs on semiconductors of up to 100 percent. Under the claim that "Taipei has stolen the chip business from Washington," tariffs of up to 100 percent also threaten semiconductors imported from Taiwan.

Uncertainties for the USA—and for TSMC

"New import restrictions could jeopardize the current leadership of the USA in the competitive technology industry and create uncertainty for many ongoing semiconductor projects in the USA, including TSMC Arizona's significant investment plan in Phoenix," TSMC reportedly wrote to the U.S. Department of Commerce.

TSMC Arizona will soon begin operation of a second wafer factory, and a groundbreaking ceremony was recently celebrated for a third. Additionally, TSMC's C.C. Wei announced in March that the company plans to invest another $100 billion at the Arizona site to build three more fabs for wafers, two facilities for testing & packaging, and an R&D center.

When the entire site is fully built, it is expected to produce around 100,000 wafers per month. TSMC assumes that 30 percent of the company's capacities for 2-nanometer process technology and advanced technology nodes will then be located in the USA. However, these investments could prove uneconomical if the demand from leading U.S. customers for TSMC's production capacity and services does not grow.

Investments at Risk

However, this growth is seen as threatened. If necessary, the investments in the Arizona site must be reassessed. "Tariffs that increase the cost of consumer products will decrease the demand for such products and the semiconductor components contained in them," it states. "Therefore, TSMC respectfully requests that any countermeasures resulting from this investigation not extend to end products and semi-finished products containing semiconductors." Both in terms of quantity and quality, imported semiconductor manufacturing equipment and materials are currently not available on the U.S. market.

"At the very least, any tariffs or other import restrictions should be imposed with realistic adjustment periods for TSMC Arizona and other U.S. companies and investors who have already committed to significant semiconductor production in the USA," the company is quoted as saying. "This would also ensure that duty-free access to inputs continues where local sourcing is not available or unrealistic, or time is needed to go onshore, especially from long-standing suppliers within the ecosystem." (sb)