TSMC Weighs Adding Six More Fabs in Dallas, Texas, After Arizona

[Daniel Nenni]

TSMC is exploring plans to build a second major semiconductor production base in the Dallas area of Texas, following its Arizona expansion. The proposal calls for six additional advanced wafer fabs, with investment expected to exceed the $265 billion committed to Arizona. With U.S. customers accounting for more than 75% of revenue, surging AI and HPC demand from Nvidia and Apple, tariff pressure from the Trump administration, and growing constraints on land, water, and power in Taiwan are cited as key drivers. TSMC envisions a "Southern Semiconductor Dual-Core Corridor" linking Arizona and Texas, though no official decision has been made pending board approval.

Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract chipmaker, is reportedly considering the Dallas area in Texas as the leading candidate for its second major U.S. production hub. If the company expands into Texas after Arizona, it would create a semiconductor production axis spanning the southern United States.

Taiwan's United Daily News reported on the 29th, citing sources, that TSMC is prioritizing a plan to build six additional advanced wafer fabs in Dallas. While the specific investment amount has not been finalized, it is expected to exceed the $265 billion (approximately 359.5 trillion won) already committed to the Arizona site.

The move is closely tied to surging orders from U.S. customers. In the first half of this year, U.S. customers accounted for approximately 75.6% of TSMC's total revenue. Major clients including Nvidia, Intel, AMD, and Apple are rapidly expanding demand for artificial intelligence (AI) and high-performance computing (HPC) semiconductors, driving the need for expanded local production capacity.

A tech industry insider said, "Products like HBM require close collaboration with customers for customization. With most customers located in the U.S., the ability to avoid tariffs, and the U.S. government pressuring for investment, expanding U.S. investment is hardly a bad choice."

Trump Tariff Pressure and Constraints in Taiwan​

Trade pressure from the Donald Trump administration is also cited as a factor accelerating the investment review. According to industry sources, the U.S. government has repeatedly signaled that semiconductor manufacturers failing to expand U.S. production could face tariffs as high as 200%. For TSMC, expanding local production capacity to mitigate trade risk has become unavoidable.

Deteriorating conditions for expansion within Taiwan are another driver of overseas investment. Securing land, water, and power for new fabs has become increasingly difficult, making the U.S. an attractive alternative. Texas is viewed as having relatively stable infrastructure compared to the Phoenix, Arizona site, which has faced water shortages, power supply instability, and workforce challenges.

The North Texas region, including Dallas, is nicknamed "Silicon Prairie" in reference to California's Silicon Valley. Texas Instruments (TI), Samsung Electronics, and Tesla are already making large-scale investments there, and the state's low tax burden has attracted a steady stream of tech company headquarters relocations.

Southern Semiconductor Dual-Core Corridor Vision​

TSMC is reportedly envisioning a "Southern Semiconductor Dual-Core Corridor" that would link its Arizona wafer production base with Texas's advanced semiconductor ecosystem. The strategy aims to position the two regions as twin semiconductor hubs in the southern U.S., responding to customer demand while diversifying the supply chain.

There is also speculation that the Texas fabs could adopt more advanced process nodes than those in Arizona. Given the industry's relentless push toward leading-edge technology, later-built facilities are expected to feature more advanced technology nodes.

No Official Position Yet​

TSMC has not issued an official statement regarding the Texas investment plan. Final investment decisions have not been confirmed by the board of directors. However, supply chain industry sources suggest that the Dallas site evaluation is nearing its final stages. Multiple semiconductor equipment and materials suppliers said they had heard related news but had not received official notification from TSMC.

Meanwhile, VisionPower Semiconductor Manufacturing Company (VSMC), a joint venture between TSMC affiliate Vanguard International Semiconductor Group (VIS) and Dutch semiconductor company NXP, held an opening ceremony for its first 12-inch wafer fab in Singapore on the 28th. The facility will produce 40-130 nanometer process products for automotive mixed-signal semiconductors and power management and analog products starting in 2027. Monthly wafer production capacity is planned to expand to 55,000 wafers by 2029. VIS invested $2.4 billion and NXP invested $1.6 billion, with VIS managing fab operations.

VSMC is also exploring construction of a second semiconductor fab in Singapore. With low tax rates and geographic proximity to China, the world's largest semiconductor demand market, Singapore has recently attracted a series of large-scale semiconductor investments and is emerging as a major production hub for mature-node semiconductors.

If the Texas investment materializes, TSMC's U.S. production base would be reorganized into a dual-hub system anchored by Arizona and Texas. This is viewed as a potential game-changer that could significantly reshape the U.S. semiconductor industry landscape, aligning with the U.S. government's push to localize the semiconductor supply chain.

https://finance.biggo.com/news/5259f2bf-a796-4fae-8952-af705159809e

 

[chipsntexas]

This is fascinating and doesn't seem to be driven by the current administration. Mainly just numbers and customers. These US users don't want trailing edge technology (as much), so this will be an interesting dynamic just as in AZ with the existing/new fabs there. Good luck to TSMC and their stellar growth outlook.

 

[Barnsley]

This is interesting.

"VSMC is also exploring construction of a second semiconductor fab in Singapore. With low tax rates and geographic proximity to China, the world's largest semiconductor demand market, Singapore has recently attracted a series of large-scale semiconductor investments and is emerging as a major production hub for mature-node semiconductors"

Not sure what the proximity to China means , less and less China customers want their data leaving China in order to get their products manufactured. Whether by Govt mandate or their own security concerns.

 

[benb]

As Arizona faces 20% water cuts in 2027, with another 20% likely after that, I think we're seeing the final fabs being built. Fabs need water, water is scarce and getting scarcer.

I'm not sure what is worse, how the USA plans wars or how USA plans water use. Both are pretty horrific and Arizona is going to suffer.

 

[Xebec]

Asianometry released an interesting video covering TSMC's prospects in Texas. It covers a lot more than just the SpaceX buzz - history, what % of TSMC's fabs are still in Taiwan, and some precedence for TSMC doing partnership deals (such as with Sony). He does already have an update in the video notes though as TeraFab specific news is changing fast.

 

[benb]

Here's some discussion about Samsung, Tesla, AI5 production (at both Taylor and at TSMC), a lot of unconfirmed stuff but a good summary of where Samsung is now:

Best part: How Samsung uses the word "smoothly"

 

[Xebec]

Here's some discussion about Samsung, Tesla, AI5 production (at both Taylor and at TSMC), a lot of unconfirmed stuff but a good summary of where Samsung is now:

Best part: How Samsung uses the word "smoothly"

Fwiw, This appears to be a fully AI generated video.

 

[benb]

Returning to the topic of why TSMC (and Arizona, really) are in trouble:

The Colorado River Is Overdrawn, and a Corporate Reckoning Is Imminent

For decades, the Colorado River has delivered less water than allocated, with shrinking reservoirs making up the difference. Yale SOM’s Todd Cort argues that companies across the West have yet to account for this imbalance.

insights.som.yale.edu

"Semiconductor manufacturers such as Intel in Chandler, Arizona, and TSMC in Phoenix are dependent on the negotiations over state deliveries. A poor outcome for Arizona could make for an untenable result for these water-intensive industries. Even under a favorable negotiating outcome, they can expect significant reductions in water deliveries from the Colorado River."

"The Colorado River has been drawing down its reserves for 25 years to honor promises it was never physically capable of keeping. Corporate balance sheets across the American West have been bystanders to that process, neither accounting for the depletion nor disclosing the exposure. That changes in 2026, not because companies have suddenly decided to get ahead of the problem, but because the federal government, the courts, and the market are now forcing the reckoning. A water-rights curtailment is not an abstraction in a risk factor disclosure; it is an operational shutdown, a stranded asset, a supply-chain rupture. "

 

[benb]

My take: Water-risk-awareness is a requirement for selecting your foundry. There is an unrecognized, big, and volatile risk in dependence on Arizona water supply for Intel and TSMC. And that risk is not present with Samsung in Taylor. TSMC recognized this and is shifting gears pretty fast toward Texas.

 

[hist78]

My take: Water-risk-awareness is a requirement for selecting your foundry. There is an unrecognized, big, and volatile risk in dependence on Arizona water supply for Intel and TSMC. And that risk is not present with Samsung in Taylor. TSMC recognized this and is shifting gears pretty fast toward Texas.

Indeed, the stability of the water supply is critical. However, through water recycling (up to 90% or more at TSMC Arizona) and water allocation management by the State of Arizona (such as reallocating water from agriculture to industrial and residential use), I believe that TSMC Arizona's water demand and supply are manageable.

Texas might not have a water supply issue, depending on the specific location, but electricity supply is a major challenge.

The Texas power grid had a peak consumption of 91.1 GW during the hot summer of 2026, with approximately 12–13 GW of spare capacity. However, the customer demand awaiting connection to the Texas grid is enormous. One estimate puts it at 474 GW, while another estimates roughly 439–453 GW, with most of the demand coming from data center projects. The Texas electricity supply is no way to meet such demand.

During a three-day power outage in 2021, Samsung's Austin fab suffered approximately $400 million in losses.

Considering that Texas operates its own independent power grid that is not connected to the other major US power grids, solving both its capacity and reliability problems will not be an easy task.

 

[Xebec]

Indeed, the stability of the water supply is critical. However, through water recycling (up to 90% or more at TSMC Arizona) and water allocation management by the State of Arizona (such as reallocating water from agriculture to industrial and residential use), I believe that TSMC Arizona's water demand and supply are manageable.

Texas might not have a water supply issue, depending on the specific location, but electricity supply is a major challenge.

The Texas power grid had a peak consumption of 91.1 GW during the hot summer of 2026, with approximately 12–13 GW of spare capacity. However, the customer demand awaiting connection to the Texas grid is enormous. One estimate puts it at 474 GW, while another estimates roughly 439–453 GW, with most of the demand coming from data center projects. The Texas electricity supply is no way to meet such demand.

During a three-day power outage in 2021, Samsung's Austin fab suffered approximately $400 million in losses.

Considering that Texas operates its own independent power grid that is not connected to the other major US power grids, solving both its capacity and reliability problems will not be an easy task.

FWIW: Texas appears to be at least adding power capacity over time, while Arizona's water availability seems to be shrinking..