Taiwan Semiconductor Manufacturing Company has reached an extraordinary milestone with the groundbreaking ceremony for its third fabrication facility in Arizona, marking yet another significant achievement in the company’s incredible $165 billion investment into American semiconductor manufacturing. This TSMC Arizona development officially commenced construction in late April 2025, marking what is recognized as the most significant foreign direct investment in U.S. history.
Expedited Construction Schedule
Demonstrating remarkable adaptability, TSMC Arizona has accelerated its construction timeline for the third fabrication facility. Initially scheduled for 2026, the company advanced the groundbreaking to 2025, reflecting its dedication to expanding domestic production capacity in response to potentially growing demand for advanced semiconductors. This expedited schedule follows the company’s historic board meeting, held on U.S. soil for the first time in TSMC’s 37-year history, in February 2025, signaling the potentially increasing strategic importance of its American operations.
Advanced Process Technology Implementation
The third TSMC Arizona facility will manufacture chips utilizing 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 started 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.
These facilities are distinguished by their exceptional scale, featuring cleanroom areas approximately double the size of a typical logic fab. 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.
Integrated Packaging Ecosystem
The company is expanding its U.S. presence through advanced packaging capabilities that extend beyond chip fabrication. 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.
The proximity of TSMC Arizona’s front-end fabs and Amkor’s back-end facility is designed to accelerate overall product cycle times, potentially creating a more integrated and efficient semiconductor manufacturing ecosystem. This collaboration addresses a crucial aspect of the semiconductor supply chain, which has been previously concentrated in Asia, allowing TSMC’s U.S. customers to have their chips both fabricated and packaged domestically.
Transformative Economic Development
The expanded TSMC Arizona operation 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 is expected to generate numerous direct construction jobs, with many additional indirect supplier and consumer jobs anticipated throughout this decade.
The company currently employs over 3,000 people at its Arizona campus, which spans approximately 1,100 acres. Beyond direct employment, TSMC’s presence has catalyzed a broader semiconductor ecosystem in Arizona. The Greater Phoenix Economic Council reports that the region has attracted 39 semiconductor-related companies, resulting in the creation of 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 Backing
The TSMC Arizona investment has undergone significant evolution 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.
Significant federal incentives under the CHIPS and Science Act have supported this expansion. In November 2024, the U.S. Department of Commerce finalized an award of up to $6.6 billion in direct funding for the project, 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.
Major technology companies have expressed strong support for the project. NVIDIA’s Jensen Huang emphasized the importance of producing AI infrastructure manufacturing in America. At the same time, AMD’s Lisa Su highlighted their role as one of the first and largest high-performance computing customers. Apple has positioned itself as the largest customer at the Arizona facility, committing to sourcing chips as part of its broader $500 billion U.S. investment plan.
The TSMC Arizona campus incorporates significant sustainability measures, including a target of 90% water recycling through an advanced Industrial Water Reclamation Plant designed to achieve “Near Zero Liquid Discharge.” By the end of this decade, when all three Arizona fabs are operational, TSMC will potentially establish a comprehensive semiconductor manufacturing ecosystem in the United States, thereby strengthening supply chain resilience for critical technologies.
