PHOENIX (AZFamily) -- Taiwan Semiconductor Manufacturing Company (TSMC), one of the largest semiconductor manufacturers in the world, is warning the Trump administration that tariffs on microchips and/or its manufacturing equipment could backfire against plans to make more computer chips in the United States, specifically Arizona.
In a letter obtained by Arizona's Family that's addressed to a senior Bureau of Industry and Security official, TSMC Arizona urged the feds against import restrictions such as tariffs, stating that such efforts could hurt U.S. projects and commitments currently underway, including its fab plants and R&D facility currently being built in Phoenix.
"We expect our Arizona project to foster and accelerate supply chain ecosystem development in the United States, driving over $200 billion of indirect economic output in Arizona and nationwide over the next decade," the letter read.
The chipmaker says these projects will ultimately generate tens of thousands of high-paying, highly technical jobs and as many as 40,000 construction jobs.
In particular, TSMC says semiconductor products are "extremely complex" and require planning, management, and input from supply chains around the world. Any such important restrictions, like tariffs or non-tariff barriers, could reduce demand and thus hinder market demand for U.S.-made chips.
Right now, finished semiconductors are exempt from tariffs, including the so-called "universal" tariff of 10%, but an active "Section 232'' investigation could change that in the name of national security in a matter of months. Still, TSMC cautioned against the import of semi-finished and complete products because they could reduce demand.
"...our expansion plans in Arizona are to support our U.S. customers' demand. Diminished demand could create uncertainty around the timeline for the construction and operation of our Arizona fabs. It could also undermine TSMC's financial capacity to timely execute its ambitious Arizona project. Therefore, we respectfully request that the Administration avoids imposing tariffs or other restrictive measures on semiconductors made outside of the United States."
The Taiwanese semiconductor giant instead urges what it calls "pro-growth" policies like expanding the Biden-era CHIPS and Science Act's Advanced Manufacturing Investment Tax Credit (also known as Section 48D), a 25% tax credit for semiconductor investments to bolster stateside production. In the letter, the chipmaker voices support for the BASIC Act, which extends the tax credit through 2030 and increases it to 35%.
"TSMC Arizona appreciates the opportunity to provide its perspective on the administration's efforts to promote the U.S. semiconductor industry," the letter concluded. "We look forward to continued discussion with the Administration of these critical issues."
Late last month, TSMC broke ground on its third semiconductor fab, located near 43rd Avenue and Dove Valley Road in north Phoenix, weeks after announcing a historic investment that led to international backlash after some accused the chipmaker of caving to pressure from the Trump administration.
According to the Associated Press, Taiwan President Lai Ching-te denied that TSMC's investment decision was due to political pressure. President Donald Trump previously said that Taiwan had taken away the U.S. chip business and that he wanted it back.
"TSMC's decision is necessary for its future development. The government did not face pressure from the United States during TSMC's investment process in the U.S.," said Lai during a news conference in March.