The world’s biggest chipmaker, TSMC, is raising red flags about new US tariffs that could throw a wrench into its massive $165 billion investment in Arizona. In a bold move, the company is urging the US Department of Commerce to keep chip imports duty-free.
In a letter sent on May 5 by TSMC’s Arizona subsidiary, the company laid out its case against new Section 232 tariffs on semiconductor imports. TSMC is already pouring $65 billion into three wafer fabs in Phoenix—one is up and running, another is almost done, and the third just broke ground. On top of that, they’ve committed another $100 billion for three more fabs, two advanced-packaging plants, and an R&D center, totaling a whopping $165 billion.
With all six fabs are fully operational, Arizona will reportedly churn out 100,000 wafers a month—about 30% of TSMC’s projected capacity for cutting-edge 2-nanometer chips and beyond. The company says this could spark $200 billion in economic activity and create tens of thousands of jobs.
But here’s the catch:
TSMC warns that tariffs could jack up prices for end products like phones and computers, which would likely crush chip demand. That would make it harder to justify the Arizona expansion, especially since the US doesn’t produce a lot of the specialized equipment and materials TSMC needs. The company is asking for duty-free access for firms with major US chip production to keep supply chains smooth.
This comes as the US Department of Commerce wraps up a Section 232 report, due soon after May 26, amid talk from former President Donald Trump about slapping up to 100% tariffs on Taiwanese chips, claiming Taiwan “stole” US business.
TSMC is pushing back hard, saying its Arizona plans—and America’s chipmaking ambitions—hinge on avoiding those tariffs. With so much at stake, all eyes are on how the US balances trade policy with its semiconductor goals.
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