Derek Au on TSMC's Arizona semiconductor factories

Despite significant delays and cost overruns at TSMC’s Arizona plants, the company invested $65 billion during the Biden years and pledged another $100 billion after Trump took office. Derek Au, keen technology observer and investor, writes: 

Were it not for the punitive actions of the US [threat of tariffs], there is simply no advantage for the TSMC to build in the US.  The CHIPS Act subsidy is just a mild sweetener.  If you listen carefully to the announcement at the White House, Trump doesn’t even try to hide it.  He says he strong armed the Chairman [C.C. Wei].  If we believe in comparative advantage there are none for building advanced fabs in the US.  The operating costs are much higher, salaries are higher and there is no domestic talent.  There is also no local supplier chain. Everything has to be imported.  In Arizona they are saying the area around the fab is becoming Little Taipei.  Ethnic restaurants and grocery stores are springing up to cater to the new workers from abroad.  I’ve read that operating US chip plants would lower operating margins for the entire TSMC.  But they have no choice, because Trump is going after not only TSMC but its customers to force a realignment of the supply chain.

Derek recently visited a TSMC factory in northern Phoenix:

The place is pretty massive.  I drove around the front of the fab and all of the people in the employee lots walking towards the building were Asians.  The non-Asians that I saw had construction vests and looked like contractors, construction workers… 

~ Derek Au, as quoted in "Mercantilism in America," The Coffee Can Portfolio, May 6, 2025

Dani Rodrik on the CHIPS Act

A skeptic might object that Biden’s policies have not fully borne fruit and are not yet captured in official statistics.  But the fact is that hugely capital-intensive semiconductor plants generate few jobs, relative to the physical investment they require.  TSMC’s three fab investments in Arizona are expected to employ a mere 6,000 workers – which works out to more than $10 million per job.  Even if the projected tens of thousands of additional jobs in supplier industries materialize, that is a paltry return for employment.

~ Dani Rodrik, "America's manufacturing renaissance will create few good jobs," Project Syndicate, April 22, 2024

TSMC fab under construction in North Phoenix

Shaun Rein: manufacturing is not coming back to the U.S.

Don't get me wrong, this is definitely going to bring pain to the Chinese economically.  You're already seeing scores of cheap manufacturing already closing shop and relocating to Vietnam and Cambodia. Let me also be clear, they're moving to cheaper destinations.  They're not going to bring jobs or manufacturing back to the United States.  It's just not going to happen.  American doesn't have the manufacturing ecosystem: workers, land, laws that help promote strong manufacturing.  

You're already seeing TSMC, Taiwan's big semiconductor company, has spent billions of dollars trying to build semiconductor factories in Arizona and they've had huge problems, from a human resource standpoint, from a quality control standpoint and from a regulatory standpoint.  This was supposed to be Joe Biden's baby.  So it's a pipe dream, to use a word that Janet Yellen, the former U.S. Treasury Secretary, said.  It's a pipe dream to bring all this manufacturing back to the United States.

It's much better for China to make what it's good at and the United States to make what they're good at.

~ Shaun Rein, "'Made in USA:' A Wishful Scheme Dressed Up As Policy," 9:55 mark, Thinkers Forum, April 23, 2025