The US and Taiwan announce a historic $500 billion semiconductor deal, with TSMC investing in Arizona. However, the most advanced chip technologies will stay in Taiwan due to supply chains and regulations.
© D. Novikov
The United States and Taiwan have announced a major semiconductor agreement that's already being called historic. Under the deal, TSMC and the Taiwanese government intend to invest around $500 billion in developing the American semiconductor industry. However, despite these record investments, the most advanced chip manufacturing technologies will remain outside the United States.
This agreement forms part of a new trade policy between Washington and Taipei. According to Reuters, the total investment package includes TSMC's previously announced $165 billion commitment, plus additional investments, bringing the total to $500 billion. Of this, TSMC itself will invest about $250 billion, with the government providing the remainder. In return, Taiwan secured a tariff regime with duties set at 15%, comparable to the terms for Japan and South Korea.
TSMC's primary focus in the U.S. will be on Arizona. The company plans to develop several fabrication plants, advanced chip packaging facilities, and research centers aimed at training local specialists. This American initiative isn't exclusive though—TSMC is simultaneously implementing similar projects in Japan and Germany, diversifying its global production footprint.
Yet TSMC's CFO Wendell Huang made clear that the most modern manufacturing processes won't appear in the United States anytime soon. The reasons are practical: key supply chains, mature infrastructure, and the concentration of engineering talent remain firmly in Taiwan. This situation is further cemented by Taiwan's "N-2" rule, which requires overseas factories to lag behind the cutting edge by at least two generations.
Consequently, even half a trillion dollars in investment won't give the U.S. access to TSMC's most sensitive technologies. This is particularly striking given that over 70% of the company's clients are American chip designers, who increasingly need advanced nodes like A16. Whether TSMC can continue to keep critical technologies exclusively at home remains one of the key questions for the coming years.