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[News] TSMC’s $100B U.S. Bet: Six Big Questions Behind the Largest Foreign Investment in U.S. History
TSMC unveiled the largest foreign investment in U.S. history, adding $100 billion for three new fabs, two advanced packaging plants, and a major R&D center. However, the deal raises key concerns. Here are six big questions from Taiwan’s Economic Daily News, along with an analysis of each.
How will TSMC fund this huge investment?
According to the Economic Daily News, TSMC stated that the agreement is a preliminary memorandum of understanding, with details to be finalized through discussions with the U.S. government.
Analysts cited by Commercial Times suggest that if the full investment is made within Trump’s four-year term, TSMC would spend about $25 billion per year. With $38–42 billion planned for 2025, this could be over half its capex, signaling a U.S. growth shift, the report adds.
Will President Trump provide more subsidies?
Though the $100 billion plan qualifies for a 25% tax credit, Trump stated TSMC won’t receive subsidies for the deal, adding financial pressure to the company, the Commercial Times report notes.
Another report from Business Today highlights that without subsidies, TSMC will have to rely on its own resources. Meanwhile, it remains uncertain whether the U.S. will invest in Intel or introduce new subsidies. Ultimately, the U.S. prioritizes its domestic industries, making this a crucial factor in the equation.
Can the supply chain be ready in four years?
The Economic Daily News report notes that since this investment focuses on boosting U.S. manufacturing with increasingly advanced fabs, and TSMC typically builds plants only after securing customer commitments, U.S. equipment and materials suppliers are expected to benefit first.
Regarding Taiwan’s semiconductor supply chain, Economic Daily News reports that Minister of Economic Affairs Kuo Jyh-huei said a long-term shift is likely, but the current investment may not yet be enough to relocate the entire supply chain to the U.S.
How will TSMC recruit R&D talent?
According to TSMC, through this expansion, it is expected to support 40,000 construction jobs over the next four years and create tens of thousands of high-paying, high-tech jobs in advanced chip manufacturing and R&D.
As per Tom’s Hardware, about 50% of the workforce at TSMC’s Fab 21 in the U.S. still comes from Taiwan. However, this is expected to change as TSMC continues to hire more local employees over time, the report says.
Will Taiwan face a tech drain?
TSMC’s $100 billion U.S. investment sparks concerns about Taiwan’s tech leadership. Premier Cho Jung-tai stressed that “rooting in Taiwan and strengthening Taiwan” remains a firm commitment, as per the Economic Daily News.
Cho also noted that since Trump’s first term, Taiwan has shifted 30% of outbound investments to the U.S. while reducing reliance on China to 7.5%, the report notes.
As highlighted by a previous Commercial Times report, Taiwan’s National Science Council Minister Wu Cheng-wen officials reaffirmed that cutting-edge R&D will stay in Taiwan and the “N-1” rule will hold.
According to Business Today, while TSMC has committed to establishing an R&D center in the U.S., meaningful progress could take at least 3–5 years or even up to a decade.
Additionally, Taiwan and U.S. R&D are expected to focus on different areas, the report suggests. Taiwan will likely focus on process improvements, while the U.S. center explores advanced materials, silicon photonics, next-gen nodes, and quantum computing, the report adds.
Impact on gross margin
The key downside of TSMC’s massive investment would be cost. According to the Economic Daily News, U.S. fabs are far more expensive, with engineer salaries three to five times higher. TSMC’s Arizona Fab 21 costs four to five times more than in Taiwan, and the supply chain remains incomplete, the report adds.
In late January, in longer term, excluding the impact of foreign exchange rate and considering our global manufacturing footprint expansion plans, TSMC continues to forecast a long-term margin of 53% and higher is achievable. Whether this goal will change remains to be seen.
As per the Economic Daily News, analysts estimate that as TSMC’s overseas fabs ramp up, gross margins could be diluted by 2-3% this year.
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(Photo credit: TSMC)
