Taiwan Semiconductor Manufacturing Company (TSMC) has officially begun construction on its third semiconductor fabrication plant in Phoenix, Arizona — a project expected to bolster U.S. chipmaking capacity and technological leadership by the end of the decade.

The groundbreaking was marked by a visit from U.S. Secretary of Commerce Howard Lutnick, who toured the site and praised the development as part of a larger effort under the Trump Administration to strengthen America’s domestic manufacturing base and reduce dependence on foreign semiconductor supply chains.

This third fabrication facility (fab) comes on the heels of TSMC’s March 2025 announcement of a staggering $100 billion additional investment aimed at building five new advanced chip plants across the U.S., raising the company’s total U.S. commitment to $165 billion.

The U.S. government is backing these Arizona projects with billions in subsidies under the CHIPS and Science Act, which seeks to incentivize domestic semiconductor production. A preliminary, non-binding agreement signed with the U.S. Department of Commerce in 2024 outlined up to $6.6 billion in direct federal funding to support TSMC’s Arizona activities.

TSMC’s Arizona presence is expected to deliver a significant economic boost, with the company projecting that the combined developments will generate over $200 billion in economic impact for Arizona over the next decade.

TSMC Arizona’s first fab is on track to begin production using 4nm technology in the first half of 2025. Its second fab will focus on producing cutting-edge 2nm chips and next-generation nanosheet transistors, with production slated for 2028. The third fab, now under construction, will push the envelope further by manufacturing chips using 2nm or more advanced processes, making it one of the most sophisticated semiconductor facilities globally.

Each fab will feature expansive cleanroom areas — roughly double the size of a typical logic fab — to accommodate the complex demands of advanced semiconductor manufacturing.

TSMC chairman and CEO Dr. C.C. Wei underscored the significance of the company’s U.S. investments, stating:

“We were delighted to welcome U.S. Secretary of Commerce Howard Lutnick to TSMC Arizona, the largest single foreign direct investment in U.S. history, and showcase the progress of our operation as he commemorates the first 100 days of the White House administration.

As part of our commitment to support the needs of America’s leading innovators in smartphones, HPC and AI, we recently broke ground on our third fab, which will introduce more advanced semiconductor capacity to the United States.”

Beyond economic contributions, the Arizona expansion is also seen as a strategic move to bolster supply chain resilience amid global geopolitical tensions and chip shortages. With the rise of artificial intelligence, high-performance computing, and next-generation smartphone technologies, TSMC’s Arizona fabs aim to secure a stable and domestic pipeline for some of the world’s most advanced chips.

The construction efforts are being closely watched by industry analysts, state officials, and federal policymakers, who view the project as a cornerstone in America’s ambition to reclaim leadership in semiconductor manufacturing.

Originally reported by Verdict.