By Robbie Whelan and Amrith Ramkumar

Taiwan Semiconductor Manufacturing Co., the world's largest fabricator of advanced artificial-intelligence chips, is planning a significant expansion in Arizona as part of a potential trade agreement between the U.S. and Taiwan, according to people familiar with the matter.

U.S. officials have been negotiating with Taiwan for months, as the Trump administration works to reshore more high-tech manufacturing and Taiwan seeks to lower U.S. import duties.

TSMC is by far the island nation's biggest company and the sixth-largest publicly-listed company in the world, with a market value of about $1.7 trillion. It already has one chip-manufacturing plant, or fab, near Phoenix, which opened in late 2024.

Under the new deal, which is close to being completed, the U.S. would lower tariffs on goods coming from Taiwan from the current 20% rate, while Taiwan would agree to more than $300 billion in foreign direct investment and other spending in the U.S., one of the people said. The sum includes and expands upon a $165 billion commitment TSMC outlined last year.

With the new pledge, the company would build several new fabs in Arizona, which would bring its total footprint there to roughly a dozen plants, the people said.

The new planned Arizona plants would produce logic chips -- the processors designed by Nvidia, AMD and other top TSMC customers that are used for AI and other advanced computing. The company has also committed to building two new factories to make semiconductors known as packaging chips, which provide supporting functions.

Last week, TSMC paid $197 million at a public auction to buy 900 acres of land adjacent to its existing Arizona property, which will be used for the planned new facilities, a person familiar with the matter said.

News of TSMC's planned expansion and its connection to the Taiwan trade deal was earlier reported by the New York Times.

President Trump has been cutting tariffs for countries that invest more in the U.S., hoping to bolster the economy with trillions of dollars in promised spending. The administration has reached trade truces with the European Union, Japan, South Korea and Vietnam while promising to de-escalate tensions with China. Skeptics say the investment pledges underpinning the agreements are often built on existing investment plans and could easily be abandoned without consequence.

TSMC's Arizona activity has been aided by several billion dollars in federal subsidies from the 2022 Chips and Science Act.

The manufacturer of chips designed by companies such as Nvidia and Advanced Micro Devices, TSMC has a deep relationship with the Taiwanese government, which helped found the company in the 1980s and remains a significant shareholder. TSMC is an important driver of Taiwan's economy; its production of chips that go into everything from phones to computers has helped deter China from attacking the island.

Concerns about a possible invasion and scarce land and electricity have pushed TSMC to locate facilities abroad, in the U.S. and Japan. The company is building its first factory in Germany.

TSMC's dominance and relationships with customers such as Apple have made it challenging for the U.S. to develop homegrown chip manufacturers. Trump recently touted the progress made by Intel, the nation's main hope in the sector, but the company remains far from producing advanced AI chips used by leading companies. The administration took a nearly 10% stake in Intel last year by converting government grants into equity, one of many unprecedented interventions in the private sector.

Write to Robbie Whelan at robbie.whelan@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

January 12, 2026 16:44 ET (21:44 GMT)

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