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President Tump and TSMC’s head honcho C.C. Wei took the the Roosevelt Room in the White House yesterday to announce a monstrous $100 billion investment plan in the US including three new fabs or factories that manufacture computer chips. However, the investment is under review by the Taiwanese government which has emphasised that TSMC’s most advanced technology will remain in Taiwan.
It’s not entirely clear if the new investment is entirely distinct from the $65 billion TSMC has already said it plans to invest in the US. But at minimum, it’s a significant scaling up of that commitment.
TSMC says the money will cover three new chip fabs, two advanced facilities that fit chips on to PCBs and a major research and development centre. Again, it’s not thoroughly clear how this fits with TSMC’s existing plans for three fabs in the US, one of which is already up and running and allegedly making AMD Ryzen CPU dies, with the second due to come online in 2027.
Anyway, TSMC reckons the investment will create fully 40,000 construction jobs in the US, though exactly when this will all happen has yet to be detailed. However, TSMC is of critical importance to Taiwan to the extent that any such decisions require government review. According to Reuters, the Taiwanese government has indeed said the investment is under review, though viewed “positively” for now.
That said, a government spokesperson emphasised that the investment would not change the broad attitude that TSMC in Taiwan is where the really exciting stuff will continue to happen. “The most advanced processes will remain in Taiwan,” said Karen Kuo, spokesperson for the Taiwanese Presidential Office.
So what to make of it all? The first thing to say is that we’ll have to wait and see what actually happens. Massive investments like these take many years to unfold and a cynical analysis would conclude that an announcement like this is the perfect long-term rouse with which to convince the Trump administration not to impose swinging chip tariffs in the short term.
In the meantime, TSMC can continue with its existing plans and see what happens with future US administrations. Should Trump be followed by a less tariff-happy president, well, maybe those extra fabs don’t need to be built after all.
The main point here is that plans like this take so long to implement, the bulk of it would likely manifest beyond the end of President Trump’s current term in office. So, TSMC can put this particular ball in motion now and make a final call years down the road whether it actually wants to see it all fully through. You get the idea.
If TSMC did reverse this decision, of course, that would likely mean the loss of at least some investment. But then the calculation is how much that costs versus the impact of tariffs. Realpolitik, you might say.
TSMC may also have every intention of seeing this new investment package right through almost regardless of the vagaries of fluctuating US government administrations. It just doesn’t make sense to assume that’s definitely the case. There’s simply too much opportunity here for strategising and triangulating, not to mention plenty of time for the facts on the ground, including tariff levels, to change.
The current US administration is certainly making extraordinary demands on the chip industry, so it would be wise to expect the response to be equally extraordinary, in every possible sense.
While all this is going on, arch rival Intel’s fabs are supposedly spooling up to take on TSMC directly with the all-important 18A node. We reported yesterday that Broadcom and Nvidia are producing test chips on the new node, though that’s a long way from implying that either company will actually become a customer of Intel.
Ultimately, if the likes of Nvidia wasn’t at least putting a few test chips through Intel’s new fabs to get a feel for its offerings, then that would be very bad news. But the broader chip industry in the US does seem to be hotting up. Hopefully, the ultimate end result will be lots of chip capacity and cheaper CPUs and GPUs. Fingers and toes crossed.
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Kurt Indovina
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