TSMC hits back at US, warns tariffs could derail $165 billion Arizona investment

TSMC's USD 165 billion investment aims to build advanced semiconductor fabrication facilities in Arizona.

Amid the mounting tariff woes by Trump administration, Taiwan Semiconductor Manufacturing Company (TSMC) has warned the United States that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona.

"New import restrictions could jeopardize current U.S. leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the U.S., including TSMC Arizona's significant investment plan in Phoenix," the chipmaker wrote in a letter to the US Department of Commerce, ANI reported.

TSMC's USD 165 billion investment aims to build advanced semiconductor fabrication facilities in the state, but the Taiwan-based company warned that tariffs could reduce demand for chips and jeopardize the project's success.

It argued that tariffs would increase costs for end consumers, leading to lower demand for products containing semiconductors, reported Focus Taiwan.

In the letter, TSMC said any import measures adopted by the US government "should not create uncertainties for existing semiconductor investments," referring to its huge investments in Arizona.

TSMC is currently investing US$65 billion to build three advanced wafer fabs in Arizona. The first one has begun mass-producing chips, construction of the second fab is nearly complete, and a groundbreaking ceremony was held for the third fab last month, according to a report by Focus Taiwan.

In March, TSMC pledged an additional US$100 billion of investment in Arizona over the next few years to build three more wafer fabs, two packaging and testing plants and one research and development center to bring the total investment to US$165 billion.

TSMC said in the letter that the successful and timely completion of its Arizona project depended on the company's expectation of growing demand for its production manufacturing capacity and services from its leading U.S. customers.

However, "tariffs that raise the cost of end consumer products will lower demand for such products and the semiconductor components they contain," the chipmaker said.

"Therefore, TSMC respectfully requests that any remedial import measures imposed resulting from this investigation not extend to downstream end products and semi-finished products containing semiconductors," the company said.

According to TSMC, after its project is fully online, TSMC Arizona is expected to roll out 100,000 wafers a month, "making it a GIGAFAB cluster."

TSMC said Arizona will eventually account for about 30 percent of the company's total global capacity of sophisticated 2 nanometer process and more advanced technology nodes, according to Focus Taiwan.

This comes as US President Donald Trump has threatened to impost tariffs of up to 100 percent on semiconductors from Taiwan, repeatedly claiming Taipei "stole" the chip business from Washington.

(With inputs from ANI)