Taiwan Semiconductor Manufacturing Co. (TSMC) is weighing a second large-scale U.S. manufacturing campus in North Texas with as many as six advanced wafer fabs, according to Taiwanese media reports citing semiconductor equipment suppliers. At the same time, the chipmaker is said to be evaluating five more AI packaging plants at a science park in southern Taiwan.
The world's largest contract chipmaker has not commented on either report. Both plans remain unconfirmed and would still need approval from TSMC's board of directors.
Dallas Emerges As Frontrunner For A Second US Campus
Supply chain sources say the Dallas area has become the leading candidate and may already be in the late stages of TSMC's site evaluation, Taiwan's Economic Daily News reported. Several suppliers told Taiwanese media they had heard the discussions, but TSMC has not formally asked vendors to prepare for construction, leaving room for the plan to change.
Because a second campus would likely be built around more advanced process nodes, and could include packaging and research facilities, industry sources expect its total cost to exceed TSMC's Arizona commitment. The company has disclosed no figures on investment, timing, or technology for the six fabs.
North Texas, long nicknamed the "Silicon Prairie," already hosts a deep base of chip manufacturing, equipment, materials, optical communications, and electronics firms. Texas Instruments runs large fabs in the region, and Samsung Electronics operates wafer plants in Austin.
Power, land, and labor are also part of the calculation. Leading-edge fabs consume enormous amounts of electricity and water, and the rapid build-out of AI data centers is straining grids in parts of the United States. Industry observers say TSMC's Arizona site has faced challenges with construction costs, labor, water, and power in recent years, making Texas an attractive alternative.
Arizona Sets A $265 Billion Benchmark
TSMC announced on July 16 that it would invest an additional US$100 billion in Phoenix, lifting its total U.S. commitment to US$265 billion. The expanded plan calls for up to 10 fabs, two advanced packaging plants, and a research and development center producing 2-nanometer and more advanced chips for AI and high-performance computing (HPC) customers, according to Engineering News-Record.
Chairman and CEO C.C. Wei said during the company's second-quarter earnings call that the construction pace would be set by market demand rather than a fixed timeline. "The AI megatrend continues to drive the need for more and more computation," he said.
Customers And Tariffs Pull Production Closer To America
Apple, Nvidia, AMD, and Qualcomm are among TSMC's largest customers, and U.S. clients accounted for about 76% of its revenue in the first half of 2026, the Economic Daily News reported. As those companies seek domestic supply, and as Washington pushes to bring advanced chipmaking onshore, TSMC has steadily moved closer to its end market.
Trade policy adds pressure. President Donald Trump threatened in August 2025 to impose a 100% tariff on imported chips from companies not building in the United States, and Politico reported on August 27, 2026, that the administration is weighing a fresh round of semiconductor tariffs. Taiwanese media reports have cited threatened rates as high as 200%.
Chiayi Could Double TSMC's Advanced Packaging Footprint
At home, TSMC is reportedly evaluating five more advanced packaging plants in the third phase of the Chiayi Science Park, according to supply chain sources. The move would double its planned packaging presence there from five plants to 10.
The talk follows a September 23 announcement by Taiwan's government opening public consultation on the Chiayi Park Expansion Plan (Phase II Expansion), widely referred to as Chiayi Science Park Phase III. The expansion targets AI, heterogeneous packaging, silicon photonics, high-speed broadband, quantum technology, and net-zero industries, but it must still clear an environmental impact assessment and further review.
According to the Southern Taiwan Science Park Bureau, TSMC has already planned two packaging plants, P1 and P2, in the park's first phase, with mass production expected in 2027. Three more, P3 through P5, are slated for the second phase. Construction of P3 is underway, and development of that phase is expected to be completed in 2031.
Further south, construction has begun on the 88.73-hectare Baipu Industrial Park in Kaohsiung's Qiaotou District, a cluster for advanced packaging materials and equipment suppliers. Land is expected to open for lease in the first quarter of 2027, with standard factory buildings completed by the second quarter of 2029.
Why CoWoS Has Become The AI Bottleneck
The Chiayi push reflects how packaging has become as critical as transistor scaling for AI chips. TSMC's CoWoS (Chip on Wafer on Substrate) technology uses a silicon interposer to link GPUs, CPUs, high-bandwidth memory (HBM), and I/O chiplets in a single package, boosting bandwidth while cutting latency and power consumption.
As AI accelerators pair more HBM stacks with ever-larger dies, packaging capacity has emerged as a key constraint on output. TSMC began mass-producing CoWoS in 2012 and has since developed the CoWoS-S, CoWoS-R, and CoWoS-L variants, alongside SoIC 3D stacking with hybrid bonding under its 3DFabric platform. Silicon photonics, also on Chiayi's list, is gaining importance as data center networks move toward 1.6T and 3.2T speeds.
Record Spending Backs TSMC's Two Track Strategy
TSMC's dominance gives it room to spend. Its share of the pure-play foundry market reached 71% in the second quarter, according to Counterpoint Research, driven by 2nm mass production, the continued ramp-up of 3nm capacity, and tight supply of mature-node and advanced packaging capacity.
The company spent US$26.8 billion on capital expenditures in the first half of 2026. In July, it raised full-year guidance to between US$60 billion and US$64 billion, up from US$52 billion to US$56 billion, a record. Roughly 70% to 80% of that budget goes to advanced process technologies.
Taken together, the reports point to a two-track strategy: building leading-edge wafer capacity closer to U.S. customers while anchoring much of the AI packaging supply chain in southern Taiwan. Investors may get more clarity when TSMC reports third-quarter results on October 15.
Sources: （Related： TSMC Profit Jumps 77%, Board Approves $29.4 Billion Capital Budget ｜ Latest ）
