Taiwan Semiconductor (TSMC) Stock: Trade Deal Fuels Massive Expansion

TLDR

Table of Contents

TSMC acquired an additional 900-acre site in Arizona after its original 1,100 acres proved too small
Capital expenditures expected to surge over 30% driven by AI chip demand growth
First Arizona fab now achieves yields matching Taiwan facilities with Apple as largest customer
U.S.-Taiwan trade agreement caps tariffs at 15% and includes $250 billion investment pledge
Second fab targets late 2027 production while third fab aims for end-of-decade launch

TSMC completed the purchase of a second 900-acre parcel in Arizona, doubling its land holdings as the world’s largest contract chipmaker accelerates U.S. expansion. The additional space addresses capacity constraints at its original 1,100-acre site.

Taiwan Semiconductor Manufacturing Company Limited, TSM

CFO Wendell Huang attributed the expansion to “strong conviction on the AI mega trend.” The company projects capital spending will climb more than 30% compared with 2025 levels. CEO C.C. Wei outlined plans for a “gigafab cluster” during the quarterly earnings call.

The original Arizona site was designed for six wafer fabrication plants, two advanced packaging facilities, and a research center. Some facilities will now shift to the newly acquired land, with remaining space reserved for future flexibility.

Production Milestones Achieved

TSMC’s first Arizona fab started volume production in Q4 2024 using 4-nanometer technology. The facility now delivers yields and performance matching the company’s premier Taiwan operations.

“It demonstrates that our manufacturing excellence can be repeated in the U.S.,” Huang said. Apple serves as the first and largest customer, while Nvidia, AMD, and Qualcomm also utilize the facility.

TSMC Arizona began producing Nvidia’s Blackwell GPUs with its N4P process in October 2025. The success has accelerated timelines for additional facilities.

Construction of the second fab is complete with tool installation planned for 2026. The plant will employ 3-nanometer technology with volume production starting in the second half of 2027.

A third fab broke ground in April 2025 and will manufacture 2-nanometer chips. Volume production targets the decade’s end. The company is applying for permits for a fourth fab and its first advanced packaging plant.

Trade Framework Provides Support

Thursday’s U.S.-Taiwan trade deal reduces tariffs on Taiwanese goods to 15% from 20%. The agreement encompasses $250 billion in direct investments from Taiwanese firms plus $250 billion in credit guarantees.

U.S. Commerce Secretary Howard Lutnick said the goal is relocating 40% of Taiwan’s semiconductor supply chain to American soil. The $250 billion includes TSMC’s $100 billion commitment announced in 2025.

Huang clarified expansion plans stem from customer demand rather than trade negotiations. “The trade deal is between two governments, and we are not part of the discussions,” he stated.

TSMC has committed $165 billion to U.S. operations to date. Profit margins remain higher in Taiwan due to lower labor costs, and the company will continue developing cutting-edge technologies there where research teams work alongside manufacturing.

TSMC shares climbed more than 3% in Taipei trading Friday following the earnings report and trade deal announcement.

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