TSMC threatens to scale back Arizona fabs over US chip tariffs

TSMC has warned the US government that it may halt or scale back plans to expand its semiconductor manufacturing in Arizona if new tariffs on foreign-made chips are introduced. However, the entire plan now hangs in the balance, depending on how the White House proceeds.

The company, which supplies key US tech firms like Apple and Nvidia, says such tariffs would make production costly and risk reducing demand. TSMC currently operates one plant in Arizona, with two more under construction and three additional facilities planned.

The warning comes as the Biden administration considers imposing tariffs on imported semiconductors. TSMC argues that firms already investing heavily in US chip production, like itself, should be exempt. In a letter to the US Commerce Department, it cited risks to customer demand and its own business strategy.

Arizona is set to become central to TSMC’s most advanced chipmaking, with upcoming 2nm and 1.6nm chips produced using cutting-edge technology. These new fabs could make up 30% of the company’s future high-end capacity.

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