TSMC Races to Close the US Chip Loop as Rivals Stumble

The semiconductor giant is rewriting its playbook on two fronts: building out a complete chipmaking ecosystem on American soil while watching a key competitor’s labor troubles potentially funnel billions in orders its way. Taiwan Semiconductor Manufacturing Company has confirmed that construction has begun on an advanced chip-packaging facility at its Arizona campus, aiming to have the plant operational before 2029.

The move addresses a long-standing inefficiency for major clients like Apple and Nvidia. Until now, chips fabricated in TSMC’s US factories had to be shipped back to Taiwan for the critical packaging step — a process that uses technologies like CoWoS to assemble multiple chips into a single high-performance unit. That bottleneck has been particularly painful for Nvidia, whose AI accelerators rely heavily on advanced packaging.

Once the Arizona packaging plant comes online, customers will be able to complete the entire production cycle — from wafer fabrication to final packaging — within the United States. TSMC plans to expand its CoWoS capacity to 14 reticle sizes by 2028, sufficient for roughly 10 large compute units and 20 HBM memory stacks, with further expansion slated for 2029. The company also expects to bring its optical co-packaging component, COUPE, into production next year, promising double the energy efficiency and a tenfold reduction in latency compared with conventional solutions.

A Rival in Turmoil

The timing could hardly be better for TSMC. Samsung faces the prospect of a massive labor strike starting May 21, with some 40,000 employees threatening to walk out. The disruption could severely hamper AI chip production in South Korea, and market observers expect customers to shift orders to TSMC as a result.

The Taiwanese giant’s stock has already priced in much of the optimism. Shares closed Friday at $402.46, a new 52-week high representing a gain of roughly 47 percent since the start of the year. First-quarter revenue surged nearly 41 percent year-over-year to $35.9 billion, while net profit jumped more than 58 percent. For the second quarter, management has guided for revenue between $39.0 billion and $40.2 billion, with gross margins in the 65.5 to 67.5 percent range. Full-year revenue growth is expected to exceed 30 percent, and capital expenditure should land at the upper end of the $52 billion to $56 billion target range.

Technology Roadmap and the EUV Question

On the process technology front, TSMC unveiled the A13 node at its Santa Clara symposium, a direct evolution of the A14 that offers a 6 percent die size reduction with full backward compatibility. Production is set to begin in 2029, one year after the A14. Notably, neither the A13 nor the A12 requires High-NA EUV lithography — a technology Intel plans to deploy for its 14A node starting in 2027. TSMC has instead opted to delay purchases of ASML’s most advanced lithography machines, which cost over $350 million each, until 2029, preferring to optimize existing tools.

In the automotive segment, the N3A process enters production later this year, with more than ten customer projects already lined up. The N2A node, TSMC’s first automotive offering with nanosheet transistors, follows in 2028 and promises up to 20 percent higher speed at the same power consumption compared with N3A.

Political Winds and Local Competition

The push for US manufacturing is not happening in a vacuum. Former President Donald Trump has again threatened import tariffs of up to 100 percent on chips from Taiwan and South Korea, demanding that manufacturers build factories in the United States. TSMC is already investing $165 billion in its Arizona facilities, though the bulk of its production remains in Taiwan. A trade agreement signed in January offers the company some protection against new tariffs.

Meanwhile, competitor Amkor Technology is also building a packaging plant in Arizona, with production expected to begin in early 2028 — ahead of TSMC’s timeline. The two companies are in discussions about which technologies Amkor can offer to TSMC’s US clients, according to TSMC executive Kevin Zhang.

Local Capital Fuels the Rally

Back home, Taiwan has provided an additional tailwind for the stock. The country now allows local funds and ETFs to allocate up to 25 percent of their capital to a single stock, more than double the previous limit. Given that TSMC accounts for roughly 44 percent of Taiwan’s benchmark index, the regulatory change has unleashed a wave of domestic buying.

Analysts see further upside. The average price target among 18 experts stands at approximately $463. Whether that valuation holds will depend heavily on execution. The Arizona plants are scheduled to come online in 2028 and 2029, and the market will be watching closely to see whether US-based production can truly scale. For now, with Samsung’s labor unrest looming and AI demand showing no signs of cooling, TSMC appears to have the wind at its back.

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