By Garth Bevan
Taiwan Semiconductor Manufacturing Company’s groundbreaking ceremony for its third fabrication facility in Arizona marks yet another significant milestone in the company’s investment of $165 billion in semiconductor manufacturing in the United States. Construction for the TSMC Arizona project officially commenced in late April 2025, representing what is recognized as the most significant foreign direct investment in American history.
Strategic Schedule Enhancement
The company has demonstrated exceptional strategic planning by accelerating its construction timeline for the third fabrication facility. Initially planned for construction in 2026, TSMC Arizona moved the groundbreaking forward to 2025, reflecting its commitment to expanding U.S. production capacity amid potentially growing demand for advanced semiconductors. This expedited schedule follows TSMC’s board meeting held on U.S. soil for the first time in the company’s 37-year history in February 2025, signaling the potentially increasing strategic importance of its American operations.
Advanced Process Technology Implementation
The third facility will manufacture chips using 2-nanometer or more advanced process technology, with production potentially scheduled to begin by the end of this decade. This installation complements TSMC’s first Arizona fab, which commenced volume production of 4-nanometer chips in late 2024, and a second fab currently under construction that will focus on advanced 2-nanometer technology, featuring next-generation nanosheet transistors, with production targeted for 2028.
What distinguishes these TSMC Arizona facilities is their exceptional scale — each will feature cleanroom areas approximately double the size of a typical logic fab. This expanded capacity is designed to accommodate the extensive equipment required for leading-edge production, potentially positioning the complex at the forefront of semiconductor manufacturing technology in the United States.
Packaging Technology and Supply Chain Coordination
Beyond chip fabrication, the company is enhancing its U.S. presence through advanced packaging capabilities. In October 2024, TSMC signed an agreement with Amkor Technology to collaborate on advanced packaging at Amkor’s planned $2 billion facility in Peoria, Arizona. The partnership focuses on TSMC’s Integrated Fan-Out (InFO) and Chip on Wafer on Substrate (CoWoS) packaging technologies, which are critical for smartphone applications and artificial intelligence GPUs.
The proximity of front-end fabs and Amkor’s back-end facility is designed to accelerate overall product cycle times, potentially creating a more integrated and efficient semiconductor manufacturing ecosystem in Arizona. This collaboration addresses a crucial aspect of the semiconductor supply chain, which has been previously concentrated in Asia, allowing U.S. customers to have their chips both fabricated and packaged domestically.
TSMC will reportedly establish its own CoWoS advanced packaging plant in the U.S., part of its expanded TSMC Arizona campus. This should complement the company’s significant expansion of packaging capacity in Taiwan, where CoWoS capacity is projected to nearly triple to 90,000 wafers per month by the end of 2026.
Regional Economic Development and Employment Creation
The expanded operation represents a potentially transformative investment for the region’s economy. When fully operational, the three fabs are expected to create approximately 6,000 direct high-tech jobs. The construction phase alone may generate many direct construction jobs, with many additional indirect supplier and consumer jobs anticipated throughout this decade.
The company currently employs over 3,000 people at its Arizona campus, which spans approximately 1,100 acres. Beyond direct employment, TSMC’s presence has catalyzed a broader semiconductor ecosystem in Arizona. According to the Greater Phoenix Economic Council, the region has attracted 39 semiconductor-related companies, resulting in the creation of more than 7,700 jobs and over $37 billion in capital investment. This clustering effect is transforming Phoenix into what some industry observers have dubbed the “Silicon Desert.”
Investment Evolution and Federal Incentives
The TSMC Arizona investment has undergone significant evolution since its initial announcement. What began as a $12 billion commitment in 2020 expanded to $40 billion in 2022, then to $65 billion in 2024 with the addition of the third fab. In March 2025, TSMC announced an additional $100 billion investment, bringing the total to $165 billion.
Significant federal incentives under the CHIPS and Science Act have supported this expansion. In November 2024, the U.S. Department of Commerce finalized an award of up to $6.6 billion in direct funding for the project, along with up to $5 billion in loans. The company is also eligible for Investment Tax Credits of up to 25% on qualified capital expenditures.
In exchange for this support, TSMC committed to bringing its most advanced semiconductor manufacturing technologies to American soil, addressing concerns about the concentration of leading-edge chip production in Taiwan. The agreement includes provisions for profit sharing with the U.S. government if the project returns exceed projections.
Strategic Customer Commitments and Environmental Sustainability
Major technology companies have expressed support for the project. Jensen Huang of NVIDIA emphasized the importance of producing AI infrastructure manufacturing in America. Lisa Su of AMD highlighted their relationship as one of the first and largest customers of high-performance computing. Apple has positioned itself as the largest customer at the TSMC Arizona facility, committing to sourcing chips as part of its broader $500 billion U.S. investment plan.
The campus incorporates significant sustainability measures, including a target of 90% water recycling through an advanced Industrial Water Reclamation Plant designed to achieve “Near Zero Liquid Discharge.” By the end of this decade, when all three Arizona fabs are operational, TSMC will potentially establish a comprehensive semiconductor manufacturing ecosystem in the United States, thereby strengthening supply resilience and reducing dependency on offshore production.
