TSMC Considers New Plant in Lone Star State

TSMC doesn’t need everything to be bigger in Texas. These days it’ll take any increase in production capacity it can eke out.

According to reports from Bloomberg and Reuters, the chip-printing king is considering a new multibillion-dollar campus in the Lone Star State in what would be its second production hub in the US in addition to an Arizona facility that continues to take shape. The plans are still in the earliest of stages, both outlets reported, meaning the headlines may yet be, in Texas speak, all hat and no cattle. Either way, it’s a sign that TSMC is looking to increase its ability to meet the AI industry’s insatiable demand.

Taiwan Two-Step

Any Texas plant would feature multiple foundries, sources told Bloomberg, each of which would cost as much as $20 billion. The entire project, however, is likely contingent on the extension of tax credits established in the 2022 Chips and Science Act. Those government incentives helped bring TSMC to Arizona, where an initial $12 billion investment has ballooned into a $265 billion capex bonanza as the company rapidly tries to expand its production capacity. One fab at the Arizona plant has already begun high-volume production of 4-nanometer chips, such as Nvidia’s Blackwell GPUs; construction on three more fabs is underway, with each planned to open over the next few years.

Note: The vast majority of Arizona-made chips are subsequently shipped to Taiwan, where TSMC completes its highly technical “CoWoS” packaging and assembly process. The company aims to have CoWoS capacity at the Arizona facility by 2029. But until then, round trips to Taiwan will continue to be just one of the company’s biggest bottlenecks amid booming demand:

• Last year, TSMC’s revenue hit $122 billion, up 35% year-over-year in US dollar terms; in July, the company said it expects to grow another 40% in its fiscal year 2026. Its actual production capacity, on the other hand, has only grown by the mid-single digits every year since 2024.
• The company has had to roughly double its planned orders for chipmaking equipment already this year, one executive said at a conference last month. It has roughly 10 more plants under construction in Taiwan, as well as locations in Japan and Germany.

Shoot for the Stars: Demand for TSMC’s services could soon increase even further, at least if Google completes its moonshot. On Thursday, a satellite carrying the tech giant’s personally designed, TSMC-made AI chips hitched a ride to outer space on the SpaceX Falcon 9 rocket. Once in orbit, Google will test the efficacy of solar-powered outer space data centers. If successful, Google will presumably kickstart a new rush on the infinite real estate offered by outer space, and further stress TSMC’s very earthbound operations.