TSMC , the world's largest maker of custom semiconductors, is considering building a new large manufacturing facility in Texas to bolster its U.S. presence and meet growing demand for advanced artificial intelligence chips , Bloomberg reported. The plans are still in the early stages and are contingent on Congress extending certain tax incentives
The investment opportunity is particularly important at a time when artificial intelligence infrastructures require more and more powerful processors. The chips used in AI accelerators, data centers and high-performance computing systems are at the center of competition between technology companies and states.
Each new semiconductor manufacturing facility, known as a fab, could require an investment of at least $20 billion. Therefore, a facility with multiple units could result in a total cost in the tens of billions, further strengthening TSMC's industrial presence in North America.
The company, however, has not officially confirmed these plans. According to available information, it is considering different options for expanding its international production capacity, without having announced a final decision on Texas.
The tax incentive that can determine the investment
A key factor in the plan's implementation is U.S. tax policy . TSMC is reportedly considering the investment on the condition that Congress extends a 35% manufacturing tax break , which is tied to the start of relevant work by the end of December.
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Without an extension, the economic context of the investment may change significantly. The construction of semiconductor factories requires huge initial capital, specialized equipment, advanced infrastructure and multi-year planning. Even relatively small changes in tax treatment can affect the timing and performance of an investment of this size.
Senators Mike Crapo and Ron Wyden have said they remain committed to reaching an agreement on the regulation. However, the prospect of an extension within the year is not considered a given, creating uncertainty for companies planning new manufacturing facilities.
The TSMC case also illustrates how governments use tax incentives to attract strategic industries. The production of advanced semiconductors is not only a business activity, but is also linked to economic security, technological autonomy and the adequacy of critical components.
TSMC is already investing $265 billion in Arizona
The potential Texas facility would add to an already extensive TSMC investment program in the United States. The company has committed about $265 billion to Arizona, where it plans to develop ten manufacturing plants, two advanced chip packaging facilities and a research center.
The investment is part of a U.S. effort to boost domestic semiconductor production and reduce its reliance on facilities in Asia. TSMC makes chips for major companies including Nvidia and Apple, whose products depend on advanced manufacturing technologies.
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Moving some production closer to the U.S. market can reduce some supply chain risks. However, building new factories does not automatically guarantee that all advanced technologies will be moved out of Taiwan, where TSMC still maintains its most advanced research and manufacturing operations.
Texas already has a significant presence in the semiconductor industry, with facilities from Samsung and Texas Instruments, and other infrastructure development plans have been announced. TSMC is also reportedly considering Singapore as a potential location for expansion, without announcing a final choice.
Europe: Investment of over 10 billion euros in Dresden
TSMC's European presence is taking a different direction. In Dresden, Germany, the company is participating in the European Semiconductor Manufacturing Company (ESMC) consortium, a project with a total budget of more than 10 billion euros.
In August 2024, the European Commission approved €5 billion in state aid for the facility. The plant is designed to produce around 40,000 silicon wafers per month, with equipment installation and production start-up scheduled to be phased in by 2027. Full production capacity is expected to be reached in 2029.
The facility will focus on 28- and 22-nanometer CMOS technologies, as well as 16- and 12-nanometer FinFETs. These are technologies used in applications such as automotive, industrial equipment and various electronic systems, not for the most advanced AI processors required by the largest technology companies.
This diversification matters for European strategy. The continent seeks to boost the semiconductor production its industry needs, but attracting cutting-edge investment remains a different challenge.
The European target for 2030
The European Union has set a goal of reaching 20% of the global semiconductor market by 2030. However, its share was at 9.8% in 2022, while the forecasts for the development of the market place it at 11.7%.
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The European Court of Auditors has highlighted the difficulties in achieving the target. At the same time, companies in the sector are calling for a new European plan, known as the “Chips Act 2.0”, to boost investment and competitiveness.
The discussion is not just about the amount of subsidies. It includes access to specialized personnel, energy efficiency, infrastructure, and the ability to attract private capital in a sector with particularly high entry costs.
The key question for Europe is whether it will be able to attract investments that will substantially strengthen its position in the global semiconductor chain. While the US is claiming new facilities with strong tax incentives, the European challenge is to create the conditions so that the next major production decisions include its own market.
