TSMC is signaling to the Trump administration that any plan to tariff foreign-made chips risks derailing the company’s $165 billion investment in Arizona semiconductor factories.
The warning comes after the Commerce Department solicited public comment on the US potentially tariffing foreign-made semiconductors to help encourage domestic chip manufacturing. In its letter to the agency, TSMC said such tariffs could threaten demand for electronics and reduce the company’s revenue.
“Diminished demand could create uncertainty around the timeline for the construction and operation of our Arizona fabs. It could also undermine TSMC’s financial capacity to timely execute its ambitious Arizona project,” the company said.
TSMC—which manufactures chips for Apple, AMD, Nvidia, and even Intel—added that: “Lower market demand for our leading US customers’ products may consequently reduce demand for TSMC’s manufacturing capacity and service onshore.”
In March, TSMC announced an additional $100 billion investment in three new fabs in Arizona, for a total of six. But so far, only one of the fabs has started producing processors, forcing TSMC to rely on its factories in Taiwan for most chip manufacturing.
As a result, the letter from TSMC urges the Trump administration to exclude the company from any semiconductor-related tariffs. “To allow investments such as TSMC Arizona to proceed expeditiously, the administration should exempt TSMC Arizona and other companies that have already committed to semiconductor manufacturing projects in the United States from tariffs or other import restrictions,” it said.
The letter notes that the company’s Arizona site “will ultimately comprise around 30% of TSMC’s total worldwide capacity for 2nm and more advanced technology nodes,” which should also be enough to meet US demands. In addition, TSMC has already started construction on its third fab in Arizona, “which will initially use 2nm and later A16 process technology, featuring Super Power Rail, TSMC’s best-in-class backside power delivery solution.”
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Numerous other companies and industry groups have also responding to the agency’s request. In its letter, PC maker Dell said the effort to manufacture more chips in the US is “nascent and lacks the requisite infrastructure to supply these products at scale to meet current and increasing demand.”
Meanwhile, Hewlett Packard Enterprise told the department: “HPE has no alternative but to import semiconductors for its US manufacturing operations. Imposing tariffs on those imported semiconductors would harm HPE’s ability to maintain and expand its domestic manufacturing activities and retard US R&D and innovation ultimately to the detriment of national security and economic growth.”
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But Intel, which manufactures chips in the US, took a slightly different view, noting the need to “Protect American Manufactured Semiconductor Wafers and Derivative Products.”
“To sustain the US semiconductor industry and support global customers, policies must address structural disparities and incentivize US-based semiconductor manufacturing,” Intel said. “As foreign buyers increasingly design out US chips due to tariff-related costs, exempting goods with US-made semiconductors from these financial burdens is crucial.”
The same letter calls for the Trump administration to exempt semiconductor wafers either made in the US “as well as wafers manufactured based on US-based process technologies and US-owned IP.” In addition, Intel wants exemptions for its supply chain, which includes chip-making equipment developed overseas.
“While Intel is committed to building semiconductors in the US, fully localizing every element of the supply chain is economically unfeasible without significant cost increases and production delays,” the company added.
About Michael Kan
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