Buoyed by another robust earnings report and a US-Taiwan trade agreement, chipmaking giant Taiwan Semiconductor Manufacturing (TSM.US) is preparing to accelerate its expansion plans in Arizona. The company had previously committed to investing $165 billion in the United States, aligning with the US government's initiative to rebuild domestic chip manufacturing capacity. However, TSMC executives have recently hinted that this investment figure will increase further as the company expands production to meet soaring demand for artificial intelligence (AI) chips.

In an interview, TSMC Chief Financial Officer Emily Tan stated that the company will continue to increase its investment in Arizona. "We have strong confidence in the mega trend of AI, which is precisely why we are increasing capital expenditure to expand capacity in both Taiwan and the US," Emily Tan said. "It's not just about expansion, but also about trying to accelerate as much as possible to meet demand or narrow the supply-demand gap."

Emily Tan's comments follow remarks by TSMC CEO C.C. Wei during an earnings call, where he indicated that the company recently purchased additional land in Arizona and plans to build a "gigafab cluster" in the state. According to Emily Tan, the original plan for the initial 1,100 acres of land TSMC acquired in Arizona included six fabs, two advanced packaging facilities, and one R&D center. However, this land proved insufficient for the company's expansion ambitions, prompting the purchase of an additional 900 acres.

Emily Tan mentioned that some facilities from the original plan will now be constructed on this second parcel of land, with the remaining area "reserved for future flexibility." In its financial results released on Thursday, TSMC projected that its 2026 capital expenditure would surge significantly to $52-56 billion, up from $40.9 billion in 2025, surpassing market expectations of $48-50 billion. The company also indicated that capital expenditures will increase substantially over the next three years.

This guidance and outlook have sparked fresh optimism for continued global AI spending growth into 2026, signaling that TSMC, as the world's largest contract chipmaker, is well-positioned to keep benefiting from the robust demand driven by the AI wave. Concurrently, TSMC's plans to accelerate its Arizona expansion coincide with the signing of a US-Taiwan trade agreement. Under this pact, tariffs on goods exported from Taiwan to the US will be reduced to 15%, and Taiwanese chip firms are to invest at least $250 billion to expand chip production in the United States.

However, Emily Tan denied any direct link between TSMC's US investment plans and the US-Taiwan trade negotiations. She stated that TSMC was not involved in the discussions for the trade agreement, but is continuing and accelerating its investment in Arizona due to customer demand. She added that TSMC's first fab in Arizona is already operational and progressing very smoothly.

It is understood that TSMC is preparing multiple phases of 2-nanometer fabs in Taiwan. Overseas, construction of the P2 factory in Arizona is complete, with production facility move-in expected in 2026. The company is also advancing construction of its factory in Germany and a second factory in Japan.

TSMC stated that its first US fab has begun volume production, and the yield and process level of the chips currently being produced are now on par with its advanced fabs in Taiwan. Nevertheless, TSMC still emphasizes that its most advanced technologies will continue to be developed and scaled in Taiwan, where the company benefits from the essential collaboration between its R&D teams and manufacturing operations.

TSMC announced that it has moved up the production timeline for its second Arizona fab to the second half of 2027, and construction of a third fab will also accelerate this year. The company stated in its recent earnings call that it has also begun applying for permits for a fourth fab.