Taiwan Semiconductor Buys More Arizona Land, Eyes Mega US Chip Hub

Taiwan Semiconductor Manufacturing Co (NYSE:TSM) is stepping up investments in both Taiwan and the U.S. as it tries to keep pace with AI-driven chip demand while Washington and Taipei deepen economic ties through a new trade agreement.

The contract chipmaker company executives said the company is expanding capacity at home and in Arizona because it sees AI as a multi-year growth engine. Speaking with CNBC's Emily Tan on Thursday, CFO Wendell Huang said the company is raising capital spending to grow in Taiwan and the U.S. and accelerate projects "where it is possible" to help close the supply gap.

Arizona Expansion Plans And Gigafab Vision

The comments followed CEO C.C. Wei's earnings-call update that Taiwan Semiconductor has purchased additional land in Arizona and plans to build a "gigafab cluster" there.

Huang said Taiwan Semiconductor's original plan for its first 1,100 acres in Arizona included six wafer fabs, two advanced packaging facilities, and an R&D center. Still, the company bought an additional 900-acre lot after determining it needed more room for expansion and "future flexibilities."

Taiwan Semiconductor also pulled forward the production timeline for its second Arizona plant to the second half of 2027, accelerated work on a third facility, and started applying for permits for a fourth, executives said.

U.S.–Taiwan Trade Deal Strengthens Semiconductor Ties

A U.S.-Taiwan trade deal signed Thursday capped U.S. tariffs on Taiwanese goods at 15%, down from 20%, without stacking on existing rates.

Under the deal, Taiwanese firms committed $250 billion in direct U.S. investments across semiconductors, and Taiwan agreed on $250 billion in credit guarantees.

CNBC also reported the deal includes plans for the U.S. and Taiwan to establish industrial parks in the U.S. and sets additional tariff terms.

U.S. Push To Localize Semiconductor Supply Chain

U.S. Commerce Secretary Howard Lutnick told CNBC's Brian Sullivan that the trade deal aims to bring 40% of Taiwan's semiconductor supply chain to the U.S.

Huang added that Taiwan Semiconductor is accelerating investment in Arizona due to customer demand and said the company has made progress at its first U.S. fab, which has started mass production.

Huang said the Arizona site is now producing chips with yields and technology levels comparable to Taiwan Semiconductor's leading facilities in Taiwan.

"It demonstrates that our manufacturing excellence can be repeated in the U.S. It's very meaningful for ourselves, and it's also very meaningful for our customers," Huang said.

At the same time, he said Taiwan Semiconductor will keep developing and scaling its most advanced technologies in Taiwan, where the company benefits from close collaboration between research and manufacturing teams and where profit margins remain higher, in part due to lower labor costs.

CNBC also reported that, while not formally written into the trade deal, Taiwan Semiconductor is likely to add as many as five more fabs on top of its current Arizona buildout, potentially bringing the total to eight.

Strong Earnings Spark Chip Sector Rally

The chipmaker posted a stellar quarterly result, triggering a chip sector stock rally.

TSM Price Action: Taiwan Semiconductor shares were up 1.10% at $345.39 during premarket trading on Friday. The stock is trading near its 52-week high of $351.33, according to Benzinga Pro data.