As President Donald Trump’s latest round of tariffs took effect at midnight of April 9, the spotlight beams on Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, and its promise to pour $165 billion into U.S. manufacturing.
Speaking at a Republican National Congressional Committee event on Tuesday, Trump boasted that he strong-armed TSMC into this commitment with a blunt ultimatum: build plants here or face a tax of up to 100%.
“TSMC, I gave them no money,” he declared, contrasting his approach with the Biden administration’s $6.6 billion grant to the company’s Arizona subsidiary. “All I did was say, if you don’t build your plant here, you’re going to pay a big tax.”
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The tariff policy, hitting over 180 countries with rates like 104% on China and 32% on Taiwan, is Trump’s signature weapon in his “America First” crusade to resurrect domestic manufacturing. TSMC’s response—a $100 billion pledge in March 2025 to build five new factories, two advanced packaging facilities, and an R&D center in Arizona, on top of a $65 billion earlier investment—has been hailed by the White House as proof it’s working.
Commerce Secretary Howard Lutnick, speaking on March 3, said TSMC’s move was about dodging tariffs to stay in “the greatest market in the world.” The company’s CEO, C.C. Wei, nodded to Trump’s vision during a White House announcement, projecting 25,000 American jobs from the expansion.
But beneath the bravado lies a tangle of challenges that could derail this vision. From regulatory snags and labor shortages to a looming $1 billion penalty over a chip found in Huawei’s hands, TSMC’s road to making chips in the U.S. is anything but smooth. As the tariff clock ticks, experts and insiders question whether Trump’s push can deliver—or if it’s a high-stakes bluff that risks backfiring.
A Tale of Tariffs and Grants
Trump’s narrative is clear: tariffs, not handouts, brought TSMC to heel. He’s dismissed the $6.6 billion CHIPS Act grant, part of Biden’s $52.7 billion plan to boost U.S. chipmaking, as unnecessary largesse for a company he calls “loaded.” The Arizona project, centered in Phoenix, started with that grant and $5 billion in loans, kicking off the construction of three factories, the first of which began producing chips in 2024. The latest $100 billion infusion, unveiled on March 3, 2025, adds five more fabs and ups the ante to $165 billion—the largest foreign investment in U.S. history, per TSMC’s own press release.
However, the credit fight obscures a murkier truth. TSMC’s initial move leaned on Biden’s incentives, de-risking a $65 billion bet on a country with no track record for advanced chip production. Trump’s tariffs, effective today, pile on pressure with a 32% rate on Taiwanese imports—steep, though shy of the threatened 100%.
TSMC’s CFO, Wendell Huang, told CNBC in January that CHIPS funding would likely continue under Trump, tied to milestones. But Lutnick’s April 2 hint that he might withhold grants to squeeze out more investment adds uncertainty. Is TSMC here because of Trump’s stick, Biden’s carrot, or both? Analysts say it’s a mix, with market demand—65% of TSMC’s 2023 revenue came from U.S. clients like Apple and Nvidia—also in play.
The Arizona Experiment
TSMC’s Arizona venture is a test case for Trump’s vision, but it’s hitting speed bumps. Fab 21, the first plant, was slated for 2024 production but slipped to 2025, while a second facility slid from 2026 to 2027-2028, per CNN. Why? Construction delays, for one—permits here take twice as long as in Taiwan, bogged down by red tape and union pushback over safety and staffing.
“The U.S. isn’t built for this yet,” says Mark Liu, a former TSMC chairman, in a Reuters interview. “Taiwan’s ecosystem is decades ahead.”
Then there’s the workforce. TSMC shipped 600 American engineers to Tainan for training, but many returned frustrated—training was light on hands-on work, heavy on language barriers (Mandarin and Taiwanese dominate), and reliant on Google Translate, per Rest of World. Of 2,200 workers at the Phoenix site, half are Taiwanese transplants, sparking cultural friction. Americans chafe at what they call rigid hierarchy; Taiwanese see U.S. hires as less committed. Turnover’s a problem—dozens quit before training ended, and TSMC’s Glassdoor rating lags at 3.2 out of 5, compared to Intel’s 4.1.
“Trump’s forcing jobs here—it’s about time,” says Mike Torres, a local contractor eyeing TSMC work.
But Sarah Nguyen, an engineer who trained in Taiwan, quit after six months. “The culture clash was brutal, and the pay didn’t match the hassle,” she says.
In Taipei, concern grows—Taiwan’s economy leans on TSMC, and a U.S. shift stokes fears of lost dominance, per South China Morning Post.
Costs are another hurdle. U.S. wages dwarf Taiwan’s, and compliance with labor and environmental rules jacks up expenses.
“This is a geopolitical bet, not an economic one,” notes a Financial Times analysis.
TSMC’s betting clients like Apple will pay more for U.S.-made chips, but with profits already squeezed—65% of revenue tied to American demand, there’s little room to maneuver. Supply chains, too, are thin; Asia’s dense network of suppliers doesn’t exist here, risking disruptions.
Tech Lag and Huawei’s Shadow
Perhaps most worrying, TSMC’s U.S. plants might not get its cutting-edge tech first. CEO Wei told Reuters in January that Taiwan would lead on innovations like 2nm chips, leaving Arizona a step behind. For a company serving tech giants racing for AI dominance, that’s a competitive risk Trump’s tariffs can’t fix.
Then there’s the Huawei mess. On April 8, Reuters broke news of a U.S. export control probe that could slap TSMC with a $1 billion-plus fine. A chip it made for Sophgo, a Chinese firm, ended up in Huawei’s Ascend 910B AI processor—violating U.S. bans on the blacklisted tech giant. TSMC cut ties with Sophgo and self-reported, but the damage lingers.
“This could chill U.S.-TSMC ties at the worst time,” warns a Bloomberg source. With national security hawks circling, it’s a wild card in Trump’s chipmaking gamble.
Trump’s push echoes his iPhone obsession—another tech trophy he wants to be made in America. But like Apple’s China-centric supply chain, TSMC’s Taiwan roots run deep. The U.S. has cash (Intel got $8.5 billion, Samsung $6.4 billion from CHIPS) and demand, but not the ecosystem. Qualcomm’s CEO, Cristiano Amon, cheered TSMC’s move as “music to our ears” on March 4, yet diversification, not relocation, is the real goal.