TSMC Raises Concerns Over U.S. Tariffs Impact on Arizona Facility

Categories: Arizona Business NewsArizona State News

TSMC's new semiconductor fabrication plant under construction in Phoenix, Arizona, aimed at boosting local economy and job creation.

News Summary

Taiwan Semiconductor Manufacturing Company (TSMC) has voiced worries about U.S. tariffs affecting its semiconductor manufacturing facility in Phoenix, Arizona. The company fears that restrictions on importation of microchips and equipment under President Trump’s tariffs might disrupt its operations. TSMC emphasizes the significance of maintaining a stable supply chain, citing the factory’s projected economic contributions and job creation as crucial for the local economy. Amidst intricate global supply issues, TSMC advocates for pro-growth policies like the expansion of manufacturing tax credits to ensure successful operations in the U.S.

Phoenix, Arizona – Taiwan Semiconductor Manufacturing Company (TSMC) has raised alarms regarding the potential impact of U.S. tariffs on its semiconductor manufacturing facility now under construction in Phoenix, Arizona. The company, which ranks among the largest semiconductor manufacturers in the world, expressed concerns that President Trump’s tariffs on microchips and manufacturing equipment could hinder its operations and projects within the United States, with particular emphasis on its Arizona site.

In a letter directed to the Bureau of Industry and Security, TSMC articulated the necessity to prevent import restrictions that could jeopardize commitments made by the U.S. government. The company anticipates that its investment in Arizona will yield over $200 billion in indirect economic output nationwide over the next decade. Additionally, the factory is projected to create tens of thousands of high-skilled technical jobs and approximately 40,000 construction positions, contributing significantly to the local economy.

TSMC underscored the intricacies related to semiconductor production, which relies heavily on a global network for its supply chain and operational management. While finished semiconductors currently enjoy an exemption from tariffs, an active “Section 232” investigation may change this status, thereby complicating TSMC’s timelines for its fabrication plants in Arizona. Import tariffs or restrictions could undercut demand for U.S.-produced chips, potentially causing significant delays in TSMC’s manufacturing schedules.

To foster a more favorable environment for semiconductor investments, TSMC called for pro-growth policies, including the expansion of manufacturing tax credits under the CHIPS and Science Act. The company showed support for the BASIC Act, which aims to increase the semiconductor investment tax credit to 35% and extend it until 2030.

In March, TSMC began constructing a third semiconductor fabrication plant in Arizona, further solidifying its commitment to U.S. soil. The first factory is set to begin production in the fourth quarter of 2024, with additional plants slated to commence operations by 2028, and others expected to complete by the decade’s end. This expansion is seen as a pivotal step towards making the U.S. a leading semiconductor manufacturing hub.

Phoenix Mayor Kate Gallego recently announced the introduction of nonstop flights connecting Phoenix and Taipei, a move tied directly to TSMC’s investments in the region. These flights aim to promote easier collaboration and connectivity between the two cities, given TSMC’s significant role in the tech industry.

The production of semiconductors demands sophisticated technology and is critical for many global technologies, including smartphones, artificial intelligence, and more. The world’s reliance on TSMC is heavily enmeshed in complex geopolitical issues, particularly the ongoing tensions between Taiwan and the U.S. and China.

To safeguard its operations, TSMC employs stringent secrecy protocols, helping to maintain the confidentiality of its manufacturing processes and designs. Despite President Trump’s earlier assertions suggesting that TSMC’s U.S. expansion aligns with his “America First” policies, the intricacies of global trade dynamics in the semiconductor industry reveal vulnerabilities associated with economic fluctuations.

The semiconductor manufacturing process is inherently dependent on a diverse range of international suppliers, which complicates the repercussions of any U.S.-specific tariffs. TSMC’s leadership has consistently emphasized the vital importance of upholding a stable supply chain to support technological advancements within the United States, asserting that any disruptions could have far-reaching consequences.

As TSMC progresses with its Arizona projects, the potential for new tariffs remains a concern that could shape the landscape of semiconductor manufacturing not just in Arizona but across the nation.