TSMC Navigates US Tariff Waters: A Taiwan Semiconductor Giant's Strategy

Amidst potential tariffs, Taiwan's TSMC and the US government collaborate to secure a mutually beneficial future for semiconductor manufacturing.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is actively engaging with the White House regarding potential US tariffs on semiconductors, aiming to find a resolution that benefits both parties, as stated by a senior executive on Friday.

Speaking at a forum hosted by the US think tank Hudson Institute in Washington, TSMC senior vice president Peter Cleveland revealed that the company is maintaining close communication with the US President Donald Trump’s administration and is hopeful that discussions are progressing "in a positive direction."

These discussions are ongoing, focusing on Taiwan's robust semiconductor manufacturing ecosystem and its exports to the US, he added.

“And they’re listening,” he noted.

However, TSMC remains uncertain about the developments expected on Wednesday, when new tariffs are anticipated from the US.

In an effort to navigate these potential tariffs and respond to President Trump's interest in relocating manufacturing to the US, TSMC has already made significant investments within the country. In March, the company committed an additional US$100 billion towards the construction of three wafer fabrication plants, two advanced integrated circuit packaging facilities, and a research and development center, bringing its total investment in Arizona to US$165 billion.

At the forum, titled “Building a Sustainable and Successful Semiconductor Ecosystem under the Trump Administration,” other industry leaders also voiced their perspectives on the potential implications of the proposed tariffs.

Jonathan Hoganson, head of US government affairs at semiconductor equipment supplier ASML Holding NV, expressed the industry's hope that new policies will strengthen the ecosystem rather than create obstacles.

Patrick Wilson, vice president of government relations at Hsinchu City-based smartphone IC designer MediaTek Inc (聯發科), emphasized the importance of establishing a favorable business environment.

“We just want to have the right tariff or regulatory environment that makes it possible for our customers to win,” he said.

TSMC plans to soon begin construction of its third advanced wafer fab in Arizona, according to Cleveland.

“We have not started to break ground on our third wafer fab in Phoenix. We would like to start next week,” he said.

Initiating construction hinges on obtaining necessary support from the US government, such as environmental permits, he indicated.

While Taiwan remains the "home" of the contract chipmaker, Cleveland described the US as an "ideal location" for TSMC to broaden its global presence.

TSMC intends to manufacture high-end chips at its Arizona facilities, and "we’re going to build those in Phoenix to sustain the US’ AI [artificial intelligence] leadership," he stated.

The first fab in Arizona has commenced production using the 4-nanometer process, while the second fab, which will utilize the 3-nanometer, 2-nanometer, and A16 processes, is currently under construction and is scheduled to start production in 2028.

The third fab, about which TSMC has provided limited details, is expected to commence production by 2030, utilizing the 2-nanometer or more advanced processes, the company announced in April of last year.

However, Cleveland acknowledged that production in the US has not been without its challenges.

“The United States is a different marketplace. Labor costs are high,” he remarked.

Nevertheless, he highlighted TSMC’s "excellent" partnership with Washington, noting the company's "good dialogue" with the US Department of Commerce regarding structural issues.

“We are optimistic about our collaboration and partnership going forward with the Trump administration as well as Capitol Hill,” he concluded.