TAIPEI (Taiwan News) — The troubled rollout of TSMC’s Arizona semiconductor plants is forcing US policymakers to confront barriers to reshoring chip production, The New York Times reported.
Spread across 1,149 acres north of Phoenix, the project is larger than New York’s Central Park and carries a price tag of NT$5.2 trillion (US$165 billion). It is one of the most expensive industrial developments ever attempted.
Cranes, heavy machinery and thousands of workers dominate the landscape, signaling Washington’s ambition to bring advanced chip production back to the US, per the report. The factories are designed to produce cutting-edge semiconductors that power AI, electric vehicles, and data centers.
US officials have framed the project as economic and national-security insurance. Concentrating chip production domestically, they argue, would reduce exposure to geopolitical shocks and supply chain disruptions.
Those concerns intensified during the COVID-19 pandemic, when bottlenecks exposed the risks of relying on a handful of overseas manufacturing hubs. Rising tensions across the Taiwan Strait further sharpened calls for reshoring advanced semiconductor production.
Yet the company at the center of this strategic push is not from the US. TSMC, the world’s most advanced chipmaker, has supplied the capital, engineering expertise, and operational know-how driving the project.
Dozens of suppliers, many based in East Asia, have followed TSMC to Arizona, investing roughly NT$1.25 trillion in chemicals, construction and engineering services. Without that imported ecosystem, the transformation of Phoenix into a semiconductor hub would not have been possible, the NYT states.
The US has not built a major new advanced chip plant since 2013. As a result, domestic experience in constructing and operating leading-edge fabs is limited.
Even with foreign expertise, progress in Arizona has been slow and costly, the report’s authors write. The project has collided with a fragmented regulatory system that governs land use, labor, safety and environmental compliance.
In Taiwan, semiconductor plants are typically built in centralized science parks overseen by a single permitting authority. In Arizona, TSMC must navigate municipal, county, state and federal agencies, often sequentially rather than in parallel.
That process forced the company to help draft roughly 18,000 technical rules to meet local requirements, at a reported cost of NT$1.1 billion. Executives say permitting alone takes at least twice as long as comparable projects in Taiwan, according to the NYT.
Environmental compliance has added another layer of complexity. Surveys for protected desert species, air-quality reviews, and water-use restrictions have all shaped construction timelines.
Water, in particular, poses a structural challenge in the desert Southwest. The first three fabs are expected to require up to 16.4 million gallons per day, though TSMC says it plans to recycle nearly all of it through on-site treatment facilities, per the report.
Labor has emerged as a second major constraint. The US lacks a deep pool of workers with recent experience building advanced semiconductor fabs.
To fill that gap, TSMC brought in hundreds of experienced technicians from Taiwan. The move triggered backlash from local unions and lawsuits from US workers alleging discrimination and unsafe working conditions.
Cultural differences have further strained relations on the factory floor. Taiwanese managers accustomed to long hours and centralized decision-making have clashed with US expectations around work-life balance and hierarchy.
TSMC says most of its Arizona workforce has been hired locally. Company executives acknowledge, however, that balancing speed with workforce training remains difficult.
Community resistance has also complicated expansion plans. Residents near the site successfully opposed a nearby advanced chip-packaging facility proposed by Amkor, citing concerns over traffic, water use and neighborhood compatibility, per the report.
The dispute highlighted tensions between national industrial goals and local land-use priorities. Similar conflicts have slowed or reshaped projects in other US states seeking to attract semiconductor investment.
Supporters of the regulatory process argue that environmental reviews and public input reflect hard-won protections. Critics counter that uncoordinated permitting undermines national efforts to rebuild strategic industries.
TSMC’s decision to build in Arizona was driven less by geography than by customer pressure. Major clients, including US technology firms, urged the company to diversify production away from Taiwan.
Washington reinforced that shift through the Chips and Science Act, which earmarked more than NT$1.64 trillion in incentives for domestic semiconductor manufacturing. TSMC secured NT$207.9 billion in federal subsidies, alongside state and local support.
Despite the obstacles, one Arizona fab is already producing chips, with two more under construction and additional facilities planned. When fully built out, TSMC expects nearly one-third of its most advanced chips to be made in the US.
