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 an incredible $165 billion into semiconductor manufacturing in the United States. Taiwan Semiconductor Manufacturing Company (TSMC) officially commenced construction in late April 2025.
Accelerated Timeline for Third Fab
In a notable development, TSMC has accelerated its construction timeline for the third fab. Initially planned for construction in 2026, the company , reflecting its commitment to expanding U.S. production capacity amid the 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, also signaling the potentially increasing strategic importance of its American operations.
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Next-Generation Technology Implementation
The third Arizona 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 facility joins TSMC’s first Arizona fab, which began volume production of 4-nanometer chips in late 2024, and a second fab currently under construction that will focus on advanced 2-nanometer technology with next-generation nanosheet transistors, targeted for production in 2028.
What distinguishes these facilities is their exceptional scale — each will feature cleanroom areas approximately double the size of a typical logic fab, according to . This expanded capacity is designed to accommodate the extensive equipment required for leading-edge production, potentially positioning TSMC Arizona at the forefront of semiconductor manufacturing technology in the United States.
Advanced Packaging Capabilities
Beyond chip fabrication, TSMC 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, respectively.
ճ 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 previously concentrated in Asia, allowing TSMC’s 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 Arizona campus. This should complement the company’s significant packaging capacity expansion in Taiwan, where CoWoS capacity is projected to nearly triple to 90,000 wafers per month by the end of 2026.
Economic Impact and Job Creation
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 more than 3,000 people at its Arizona campus, which spans 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, creating 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 Support
TSMC’s Arizona investment has evolved dramatically 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 — reportedly the largest foreign direct investment in U.S. history.
This expansion has been supported by significant federal incentives under the CHIPS and Science Act. In November 2024, the U.S. Department of Commerce for TSMC Arizona, 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 project returns exceed projections.
Strategic Customer Relationships
TSMC’s Arizona fabs will potentially serve several major U.S. technology companies. During the groundbreaking ceremony, industry leaders expressed support for the project and its importance to their operations.
“AI is revolutionizing every aspect of the technology stack, and NVIDIA AI supercomputers are at the foundation,” said Jensen Huang, founder and CEO of NVIDIA, as . “We’re proud to produce our technology in Arizona, bringing AI infrastructure manufacturing back to America.”
Similarly, Lisa Su, CEO of AMD, highlighted the relationship between high-performance computing and TSMC’s ӰAV operations: “As one of the first and largest HPC customers for TSMC’s Arizona Fab, we’re proud to begin production of our leadership 5th Gen AMD EPYC server processors later this year,” she stated at the ceremony.
Apple, which positioned itself as “the largest customer” at TSMC’s Arizona facility, according to a February 2025 announcement, has reportedly committed to sourcing chips from the fab as part of its broader $500 billion U.S. investment plan.
Environmental Sustainability Efforts
Despite the massive scale of its operations, TSMC has implemented significant sustainability measures at its Arizona campus. The company has designed its facilities with a target of 90% water recycling — a crucial consideration in Arizona’s desert environment.
To achieve this goal, TSMC is building an advanced water treatment facility (Industrial Water Reclamation Plant) with a design goal of achieving “Near Zero Liquid Discharge.” This process converts industrial wastewater into water that can be reused within the facility, minimizing the operation’s impact on local water resources.
This approach mirrors TSMC’s global sustainability initiatives, which include goals of zero emissions growth by 2025, returning to 2020 emission levels by 2030, and achieving net zero emissions across its value chain by 2050.
Future Outlook
With construction now well underway on all three planned fabs, TSMC’s Arizona campus will be potentially positioned as the bastion of the U.S. semiconductor industry. The significance of its commitment to bring the most advanced manufacturing technologies to American soil may signal an important change in semiconductor manufacturing trends that have historically concentrated leading-edge fabrication in Taiwan.
By the end of this decade, when all three Arizona fabs are up and running, TSMC will potentially build a complete semiconductor manufacturing ecosystem in the United States, with which semiconductors are ready to be produced to the tune of tens of millions each year, from smartphones to AI systems. Such capability could strengthen supply resilience in the supply chain for critical technologies and eliminate dependency upon offshore production.
