Taiwan Semiconductor Manufacturing Company (TSMC) has fired back at US President Donald Trump’s threat to impose tariffs of up to 100% on Taiwanese semiconductors. The company warned that such tariffs could hurt demand for chips and put its massive $165 billion Arizona investment at risk.
TSMC is currently investing $65 billion to build three advanced chip factories in Arizona.
The first factory is already making chips, the second is nearly done, and the third broke ground last month. But the company’s plans don’t stop there. In March, TSMC pledged to pump in an extra $100 billion for three more fabs, two packaging plants, and a research center. That brings the total to a staggering $165 billion.
If tariffs make chips more expensive, end products like phones, laptops, and cars could cost more. When prices go up, people buy less. That means fewer chips will be needed, and that’s bad news for TSMC’s Arizona project.
In a letter to the US Department of Commerce, TSMC said tariffs “could jeopardize” its US investment and create uncertainty for other semiconductor projects in the country.
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TSMC said tariffs will increase costs for consumers and lower demand for products containing semiconductors. They urged the US not to slap tariffs on “downstream end products” or semi-finished products that have chips inside. In other words, don’t tax the chips indirectly by taxing the gadgets that use them.
By the time the Arizona project is fully running, TSMC expects to produce 100,000 wafers a month there, making it a “GIGAFAB cluster.” This site will handle about 30% of TSMC’s global production of cutting-edge 2-nanometer chips and more advanced technologies.
Here’s the irony: Trump says Taiwan “stole” the chip business from the US. But TSMC’s massive investment in Arizona is exactly what’s helping America stay competitive in the global tech race. Threatening tariffs might just push TSMC—and the jobs and tech that come with it—back to Asia.
TSMC’s warning shows how trade politics can quickly turn into a game of “you break it, you buy it.” If tariffs kill demand for semiconductors, it’s not just TSMC that loses — it’s the US tech industry, American workers, and consumers paying higher prices.
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