In the high tech universe, there is only a single common road that Nvidia (NASDAQ: NVDA), Advanced Micro Devices (NASDAQ: AMD), Apple (NASDAQ: AAPL), Qualcomm (NASDAQ: QCOM), Broadcom (NASDAQ: AVGO) and many others must go to get their chips made, no matter where they hail from. That road inevitably leads to Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM), the largest semiconductor foundry on the planet.
When President Trump announced his initial round of reciprocal tariffs as a precursor to new international trade deals in late March, his tariffs on Taiwan sent shockwaves down the spines of the Artificial Intelligence (AI) industry. While the top semiconductor companies in AI are Nvidia and AMD, which are both American, neither company manufactures any of their Graphics Processing Units (GPU), which are essential for AI. Both of them go to Taiwan Semiconductor Manufacturing Company for all foundry manufacturing work.
However, President Trump left foreign companies with an out – if they elected to establish any manufacturing facilities in the US, any products sourced from there sold in the US would be tariff-free. To the relief of the entire AI industry, it was announced in the spring that TSM would be investing a total of $165 billion to build US semiconductor foundries in Phoenix, Arizona.
Taiwan Semiconductor Manufacturing Company Ltd.
TSMC is the go-to chip foundry for all of Nvidia’s and AMD’s chips, in addition to many from Apple, Broadcom, Oracle, and others.
When a company like Nvidia designs a new chip, it takes it to TSM to actually print the design on a silicon wafer. TSM is the top choice for Nvidia, AMD, and many other chip designers, thanks to its precision, quality control, and innovative technical capabilities. As of mid-2025, TSM commanded an estimated 65% of global semiconductor manufacturing and 90% of advanced 3nm chips for AI and other more demanding applications.
The explosion of growth in the artificial intelligence and data center arenas have led to a commensurate demand acceleration for Graphics Processing Unit (GPU) chips and a panoply of similar ones for those fields. By focusing on precision foundry work, TSM has become the premier “go-to” player, for chip designers, even among those competing in various sectors.
The Geopolitical Threat From China
U.S. reciprocal tariffs are not the only threat to the TSM chip supply chain. Mao Zedong and Chiang Kai-shek battled for control of China after the post-Sun Yat-sen Chinese Republic era and the aftermath of WW II and the Japanese occupation. As history has shown, Chiang’s Nationalist army was forced to retreat to Taiwan when Mao’s Communist forces prevailed. Taiwan has been a geopolitical flashpoint ever since. Due to claims by The People’s Republic of China’s Communist Party leadership that Taiwan is a “rogue state” that is a part of China proper, the nation is in a state of perpetual invasion alert. Any overt military action on Taiwanese soil could result in a domino-effect of chip shortages if TSM is forced to halt production.
For the entire AI community, the inviolability of Nvidia and AMD chips that are crucial for operating AI is now more secure. For Taiwan, its semiconductor dominance via TSM is a good thing, from a national security perspective. Geopolitical observers frequently refer to Taiwan’s semiconductor industry as a “silicon shield” by serving as an incentive for the international community to keep Taiwan out of Beijing’s control. The trade negotiations between President Trump and President Xi Jinping include the level of speed and iterations of Nvidia’s exports to China, so US manufacturing is a key leverage angle for President Trump.
By The Time I Get To Phoenix
TSM has not been idle, and in fact, initiated the first steps towards Phoenix in 2020, as well as a European facility in Dresden, Germany. An initial $12 billion was allocated for the first Phoenix plant, and it has since scaled up to $165 billion, making it the largest direct foreign investment greenfield project in US history.
The total complex is slated to include:
- Six (6) semiconductor wafer fabrication plants
- Two advanced packaging facilities
- A Research & Development team center
The following milestones have already been achieved:
- First Fab: High-volume production on N4 process technology started in Q4 2024.
- Second Fab: Construction was completed on the fab structure in 2025. Volume production on N3 process technology is targeted for 2028.
- Third Fab: In April 2025, TSMC broke ground on the site of the third fab, slated for N2 and A16 process technologies. Targeting volume production by the end of the decade.
With annual global spending on AI on track to break $1.5 trillion in 2025 and to continue to expand, TSM has become one of the most crucial manufacturing companies on the face of the earth. Luckily its future prospects are no longer tethered to geography, and its Phoenix arrangement takes a key strategic asset off the table as a potential target in the geopolitical military sphere.
Top Gaining Stocks
Top Losing Stocks