Is TSMC poised for more expansion in Phoenix amid AI boom?

Article originally posted on AZ Central on January 15, 2026

Taiwan Semiconductor Manufacturing Co. looks poised for more expansion in Phoenix as it raises its annual capital budget and begins seeking permits for new fabs.

Officials said the semiconductor giant would significantly up its capital expenditures in the coming year. It spent nearly $41 billion on capital costs last year, and expects to dole out up to $56 billion in 2026.

CEO C.C. Wei added that the company was applying for permits to build its fourth factory and a new advanced packaging plant. It comes as TSMC ramps up chip production at its first fab, completed in 2024.

His remarks come as rumors swirl that President Donald Trump’s administration is nearing a trade deal with Taiwan that would obligate TSMC to build more fabs in the United States. The company has already committed to investing $165 billion in Arizona — a staggering number that represents the largest foreign direct investment in the United States’ history.

TSMC also recently purchased 900 acres of land near Loop 303 and Interstate 17 at a state land auction. Wei said the property would “support our current expansion plans” and “provide more flexibility” in response to strong customer demand.

Meanwhile, the company has repeatedly reported massive profits. It posted net income of roughly $16 billion on revenue of about $34 billion for the quarter ending Dec. 31, 2025.

Those figures were up 20.5% and 30%, respectively, compared with the same time last year, and that surge was widely expected to continue. TSMC is forecasting revenue of up to $35.8 billion next quarter.

Wei said the growth was fueled by strong demand for advanced chips linked to the artificial intelligence boom, which he called a “megatrend.” He dismissed an analysts’ suggestion that the hype around the technology might be creating an unsustainable market bubble, saying that he was confident the growing demand from customers was real.

“AI is real,” he said. “Not only real, it’s starting to grow into our daily life.”

What’s the status of construction on TSMC’s campus?

TSMC plans to create a so-called “gigafab” structure at its campus in Phoenix. It will include six fabs, two advanced packaging facilities and a research and development center.

The company’s first fab is already completed and pumping out chips using four-nanometer technology.

It is preparing to move tools into its second plant later this year. Wei said that fab is expected to enter high-volume chip production in the second half of 2027.

He said a third facility is under construction. That fab is slated to produce chips using two-nanometer technology.

Wei said the company is in the process of obtaining permits to begin construction on its fourth fab in Arizona, and its first advanced packaging facility.

Last year, the company also broke ground on a new industrial water reclamation plant to bolster sustainability at its local fabs. It will sit on 15 acres and is expected to be operational in 2028.

The company has yet to announce a timeline for the other facilities planned on its campus.