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The author is the former director of the US Department of Commerce’s Chips Program Office
Earlier this month, President Donald Trump and CC Way, CEO of Taiwan Semiconductor Manufacturing Company, announced that TSMC will invest $100 billion in Arizona chip manufacturing sites and add its existing $65 billion commitment. TSMC is the world’s dominant manufacturer of semiconductors, particularly advanced “leading” logic chips. The plan represents a major victory for the US national security.
Unfortunately, the announcement also offers opportunities for some members of the current administration, including Trump, as it raises questions about the utility of the US Chips Act, a key catalyst for TSMC’s investment. These critics have argued that tariffs are sufficient to achieve their goal of energizing US semiconductor manufacturing, as partisan efforts in 2022. I served as director of the Department of Commerce’s Chip Programs Office, so I want to explain why they’re wrong.
The chips method is at the heart of a strategy to turbocharge US semiconductor manufacturing. During the first Trump administration, officials and lawmakers recognized the urgent need to build such a strategy. Semiconductors are the fundamental technology of all advanced computing. They are also ubiquitous in technology that drives everyday life, from cars to medical equipment to fighter jets.
However, the US share of global semiconductor manufacturing industry has fallen from nearly 40% in 1990 to about 10%. The cutting edge manufacturing that promotes artificial intelligence computing has fallen to zero. The essential supply chain was dangerously vulnerable to centralized production in Taiwan. China had invested a huge amount of money to control production.
In response, senior Trump administration officials worked at TSMC in 2020, securing a $12 billion commitment to construct a single manufacturing facility (FAB) in the United States. Around the same time, a bipartisan group of lawmakers began debate that reached its peak with the Chips Act. This provided $39 billion in grants and a 25% investment tax credit for $13.7 billion to drive the manufacturing of Jumpstart semiconductor manufacturing in the US and resilience of research and development, workforce and global supply chains.
TSMC was at the heart of our plans. As Trump recently called it, it is “the most powerful company in the world.” In 2022, TSMC struggled to build its first US fab. The general industry view was that this operation would not be the cause of growth prosperity, but rather become an isolated front post. After over a year of negotiations, we secured TSMC’s commitment to invest $65 billion in three fabs and served as a $6.6 billion award for land investments in the most advanced sub-2 nanometer technology.
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When TSMC announced the replica in the lobby of an office building in Arizona, the site appeared as a complete six-fab “Zigafab.” This month’s announcement from the company represents a public commitment to this vision. It also includes a commitment to construct two advanced packaging facilities and a new centre for research and development. These are the consequential commitments that we commit to strengthening our economic and national security for future generations.
The success of the chips method has far surpassed TSMC.
Because it was initially approved, the US has invested more in electronic manufacturing than its total over the past 30 years. The semiconductor manufacturer has announced plans to invest more than $500 million in the United States. For the first time, all five cutting-edge chip manufacturers around the world (Intel, Micron, Samsung, SK Hynix, TSMC) are building and expanding here. Other economies in the world do not have more than two of these companies manufactured on the coast.
This nationwide wave of investment cannot be attributed to tariff threats, beyond dozens of projects. This is because the chip method was successfully implemented. Weakening the actions at this point can reverse progress and pass advantages to China.
Republican Sen. Todd Young recently called the Chips Act “one of the greatest successes of our time.” Our nation has a regime tradition of various parties working sequentially to advance important national security priorities. These days, it may feel like a relic of the past. But in the case of the chip method, it can be current.
