TSMC warns tariffs could hurt its US chip investment plans

Taiwan Semiconductor Manufacturing Co. (TSMC) warned that US tariffs on Taiwanese semiconductors could decrease demand for chips and impact its planned investments in Arizona.

The warning was included in a letter dated May 5 to the US Department of Commerce, responding to a US investigation under Section 232 of the Trade Expansion Act of 1962, which may lead to new tariffs on semiconductor imports.

TSMC confirmed the letter but did not disclose further details.

TSMC said that any new import tariffs should not create uncertainties for ongoing semiconductor projects, including its US$65 billion investment in three wafer fabrication facilities in Arizona.

The first facility is operational, the second is nearing completion, and a groundbreaking for the third was recently held.

TSMC also announced an additional US$100 billion investment in Arizona, raising its total planned investment to US$165 billion.

🔗 Source: Focus Taiwan

🧠 Food for thought

1️⃣ The paradox of tariffs: undermining the very investments they aim to encourage

TSMC’s warning illustrates a key contradiction in current trade policy approaches to semiconductor manufacturing.

The company’s planned $165 billion Arizona investment represents one of the largest foreign manufacturing commitments in U.S. history, designed to create domestic chip production capabilities 1.

Yet the same administration threatening tariffs on Taiwanese semiconductors is simultaneously celebrating these investments, creating a policy contradiction that puts billions in committed capital at risk.

This pattern extends beyond TSMC. South Korea recently announced a $23 billion support package for its semiconductor industry partly in response to U.S. tariff threats 2.

The semiconductor industry’s lengthy planning cycles and massive capital requirements make it particularly vulnerable to policy uncertainty, with facilities costing $10-20 billion and requiring 3-5 years from planning to production.

2️⃣ Semiconductor supply chains remain stubbornly global despite onshoring efforts

TSMC’s letter highlights an uncomfortable reality: despite billions in incentives and investments, many critical semiconductor manufacturing equipment and materials remain unavailable in the U.S. market.