Taiwan Semiconductor Manufacturing is set to increase its hefty investment in Arizona as part of a potential trade deal between the U.S. and Taiwan, according to a report.

Taiwan Semiconductor, or TSMC, would build several new manufacturing sites in Arizona under the deal, bringing its total to roughly a dozen plants, The Wall Street Journal reported, citing people familiar with the matter.

TSMC declined to comment to Barron's on the report.

TSMC has already pledged a total of $165 billion in U.S. investment amid the threat from China's ambitions to claim Taiwan, including building three new chip plants. While that has caused some controversy among Taiwanese lawmakers, the latest plan is part of a larger trade negotiation.

Under draft terms of a nearly completed trade deal, Taiwan will agree to more than $300 billion in foreign direct investment and other spending in the U.S. In exchange, the American tariff on goods coming from Taiwan will be lowered from the current level of 20%, the WSJ reported.

TSMC's American depositary receipts have more than tripled in value since late 2023. The Taiwanese company has gained hugely from being the main supplier to Nvidia, the leader in AI chips, as well as all its major competitors including Advanced Micro Devices and Broadcom.

Intel is aiming to challenge that position by expanding its own chip-manufacturing operation. Its hopes were boosted by the U.S. government's $8.9 billion investment in the chip company in August.

TSMC expanding its presence in the U.S. could hamper Intel's hopes of becoming a domestic semiconductor manufacturing champion.