Major manufacturing projects are only the first step in establishing a durable U.S. semiconductor industry.

Last month, Taiwan Semiconductor Manufacturing Co. (TSMC) pledged another US$100 billion to expand production at its fab complex in Arizona. The additional funds would bring the total for its project in the southwestern U.S. state — already the largest foreign direct investment in U.S. history — to an eye-watering US$265 billion. The announcement elicited praise from officials in Washington, who hailed it as another milestone in a yearslong effort by multiple administrations to rebuild domestic chipmaking. The question increasingly confronting both the U.S. and Taiwan governments is whether the chip giant’s latest expansion plans will finally persuade the rest of Taiwan’s semiconductor ecosystem to establish a deeper presence in the United States.

That ecosystem — built over four decades around TSMC and other chipmakers — includes companies producing silicon wafers, specialty chemicals, industrial gases, cleanroom systems, precision equipment, environmental engineering, factory automation, and chip testing. Together they form one of the world’s most sophisticated semiconductor supply chains, allowing advanced chips to be designed, manufactured, and packaged with remarkable efficiency.

While many of those companies already have a presence in the United States, relatively few have made substantial investments in manufacturing or the kind of specialized infrastructure they operate in Taiwan. Instead, many have opened sales offices, dispatched engineering teams when needed, or rented warehouses to support customers while continuing to produce most of their products in Taiwan.

That may now be beginning to change. TSMC’s first Arizona fab is now fully online and the company has demonstrated that it can operate profitably in the United States, despite construction costs estimated to be three or four times higher than in Taiwan. And with each successive round of investment (July’s announcement was the third), demand for local suppliers goes up, making it easier for smaller companies to justify investing closer to their customers.

“We see Taiwanese companies entering the U.S. in layers,” says Min-Yen Chiang, deputy director for economic security at the Research Institute for Democracy, Society, and Emerging Technology (DSET), a think tank established by the Taiwan government. The first of those was TSMC’s initial investment in Arizona. “In the next two years we are going to see increasing investment from layers two and three,” he says.

Layer two is already well established. Alongside TSMC, silicon wafer manufacturer GlobalWafers has committed US$7.5 billion to build a new production facility in Sherman, Texas. The first phase — making the majority of America’s 300-millimeter silicon discs — is operational, and last month the company entered into a US$500 million supply deal with U.S. semiconductor designer and manufacturer Micron.

On a much smaller scale, the experience of two chemical providers illustrates that Taiwan’s wider ecosystem is starting to take root in the United States.

Chang Chun Group has invested approximately US$300 million in an electronic chemicals plant in Arizona, producing electronic-grade hydrogen peroxide, TMAH developers, electronic-grade solutions, and plating chemicals used in semiconductor manufacturing.

Nearby, Sunlit Fluo & Chemical has put US$100 million into a facility producing high-purity hydrofluoric acid and other fluorine-based industrial chemicals essential to advanced chip production.

But the third layer DSET’s Chiang refers to is vast and contains a long list of players who could truly build out a resilient semiconductor industry in the United States. These include raw materials provider Taiwan Puritic, cleanroom and facility specialist Marketech International, and materials supplier Topco Scientific, among hundreds of others.

Chip industry suppliers like these have all expanded their U.S. footprint as semiconductor investment has accelerated but have held off on building factories or the type of specialized service centers they run back home. Instead, their first step has been opening sales offices, technical support centers, or warehouses, rather than committing immediately to local production or infrastructure.

It’s a decision that reflects both the opportunities and the challenges of following customers into a rapidly expanding but still developing semiconductor manufacturing base.

For the United States, however, getting those companies to deepen their presence is increasingly important. Washington wants to develop a complete domestic ecosystem capable of supporting every stage of production, from raw materials through fabrication and packaging and testing. Even before TSMC’s recent announcement, it was becoming clear that this process was gathering pace.

Last month, chip packaging and testing specialist King Yuan Electronics announced plans to invest up to US$1.4 billion in a U.S. facility, adding another important element of the semiconductor supply chain to the country’s expanding manufacturing base.

Earlier, in May, Taiwan’s Ministry of Economic Affairs (MOEA) said 20 Taiwanese companies had expressed interest in investing a combined US$35 billion in the United States. The group includes chipmakers and supply chain companies such as United Microelectronics Corp. (UMC), GlobalWafers, Win Semiconductors, and Chang Chun Group, alongside major artificial intelligence server manufacturers including Hon Hai Precision Industry (Foxconn), Quanta Computer, Wistron, Wiwynn, and Compal Electronics.

“These are investments planned by the companies themselves, not mandated by the government,” the MOEA minister Kung Ming-hsin said when announcing the plans on the sidelines of the U.S. Commerce Department’s annual SelectUSA Investment Summit. “This demonstrates that Taiwanese investment in the U.S. is no longer a matter of individual companies’ strategic moves, but rather an industry-wide investment strategy.”

For Taiwanese suppliers, the commercial opportunity extends well beyond serving TSMC. Once established in the United States, companies can compete for business from Intel, Micron, Texas Instruments, and a growing list of semiconductor manufacturers that are expanding their domestic production. That diversification is one reason industry groups say the economics of investing in the United States is steadily improving.

“Firstly, they will supply TSMC, but in the future — once they set up their operation over there — they can also get revenue from the other U.S. companies like Intel or Micron,” says Terry Tsao, global chief marketing officer and president of Taiwan at SEMI, a global industry association representing the semiconductor manufacturing supply chain. “This will make their operation in the U.S. more sustainable.”

Growing pains

Even so, industry executives caution that building a factory in the United States, where construction costs can be three to four times higher than in Taiwan, is very different from establishing an office there. Companies must also contend with higher labor costs, a shortage of experienced semiconductor engineers and technicians, and the absence of the dense industrial infrastructure that has long underpinned Taiwan’s success.

Many suppliers are accustomed to operating inside Taiwan’s science parks, where factories can be leased and companies have immediate access to utilities, logistics networks, and nearby customers. In the United States, they often find themselves purchasing land, constructing buildings, and in some cases helping to fund roads, utilities, and other supporting infrastructure before production can even begin.

“The lack of science parks is a big deterrent for Taiwanese companies,” says Steve Hsu, executive director of the Arizona-Taiwan Trade and Investment Office in Taipei. “In Taiwan they don’t build their plants, they rent them. Building infrastructure in the U.S. is a huge investment for them.”

The absence of a comprehensive double taxation agreement between Taiwan and the United States has also been a longstanding concern for businesses, with companies saying the resulting tax treatment makes investing in the United States less competitive than it could be.

Rather than waiting for these issues to be resolved, some suppliers are finding ways to reduce both cost and risk. Industry groups have begun pooling resources through ventures such as TSS2 Holdings, a consortium founded by Gudeng Precision Industrial Co. that includes companies such as materials supplier Nytex and process solution provider AblePrint Technology. By sharing warehouses, engineers, and administrative services, they can establish a local presence without each company having to duplicate investment.

Governments on both sides of the Pacific are also trying to help accelerate the process. Washington has backed semiconductor manufacturing through the CHIPS and Science Act and enhanced tax incentives for advanced manufacturers under H.R.1 (also known informally as “the Big Beautiful Bill”), while programs such as the SelectUSA Investment Summit continue to introduce overseas companies to state and local investment opportunities. Over the past several years, Taiwan has consistently fielded one of the program’s largest overseas delegations. In 2026, the Taiwan group included 113 companies, most of which were tech and semiconductor-related enterprises, according to official sources.

Taipei has expanded its own support network by establishing Taiwan Trade and Investment Service Centers in Dallas and Phoenix, which opened in August 2025 and May this year respectively, to assist companies entering the U.S. market. The centers act as unofficial counterparts to the American Institute in Taiwan and the 23 state government representative offices in Taiwan, which help facilitate bilateral trade and investment on the other side of the Pacific.

Earlier this year, Washington and Taipei signed the Agreement on Reciprocal Trade (ART), a bilateral trade and investment deal that lowered the rate of U.S. tariffs on most Taiwanese goods from 20% to 15%. Under the ART, Taiwan also committed to invest at least US$250 billion in the United States. And Taiwan agreed to provide US$250 billion in credit guarantees to help finance investment by Taiwanese companies, particularly smaller firms that may otherwise struggle to fund overseas expansion.

Industry groups are also looking further ahead. The Taiwan Electrical and Electronic Manufacturers’ Association (TEEMA) has pledged to establish Taiwanese-style science parks in the United States, though the timeline for these projects is not clear. The MOEA, which signed a memorandum of understanding with TEEMA in May on jointly promoting the development of overseas industrial clusters, told TOPICS that details of the science parks are still pending further confirmation and processing.

Taken together, these initiatives are designed to address the practical obstacles that continue to discourage many suppliers from manufacturing in the United States. Whether they succeed may determine how quickly America’s semiconductor ambitions evolve beyond a handful of flagship projects into a fully integrated industrial ecosystem.

“TSMC’s third round of investment coupled with news that GlobalWafers has a long-term supply agreement with Micron should erase any doubts smaller players have about the long-term viability of investment in the U.S.,” says Tim Culpan, author of the Taiwan-based technology newsletter Culpium. “I would expect more Taiwanese companies to decide they need to have a made-in-America plan.”

TSMC’s latest expansion does not guarantee that every Taiwanese supplier will build a factory in the United States. Many companies will continue to expand cautiously before committing to production. But each new fabrication plant strengthens the commercial case for doing so. For Washington, that matters because advanced semiconductor manufacturing depends on far more than fabrication plants alone. It is also contingent on the network of specialist companies that design, build, and supply them. Taiwan has spent decades developing that ecosystem.

The next chapter of America’s semiconductor strategy may depend on how much of it eventually decides to expand across the Pacific.