Taiwan Semiconductor Manufacturing Co. is considering a new manufacturing campus in Texas with several chip fabrication plants, each costing at least $20 billion, Bloomberg News reported Thursday, according to Quartz. The world's largest contract chipmaker has also held talks with officials in Singapore about a possible investment, a discussion that had not been previously reported.

What Happened

Citing people familiar with the plans who asked not to be identified, Bloomberg said the Texas project would be separate from TSMC's campus in Arizona, where the company has committed $265 billion. The people cautioned that planning is at an early stage. No specific Texas city or site was identified.

A decision depends partly on Washington. The federal advanced-manufacturing investment tax credit, created under the 2022 CHIPS Act and raised to 35% last year, is due to expire at the end of 2026. Sens. Mike Crapo, R-Idaho, and Ron Wyden, D-Ore., have pledged to renew it, but no legislative vehicle for an extension has emerged, Bloomberg reported.

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Singapore, which already hosts chip factories and regional offices of AI companies, is also in discussion with TSMC, according to the report. TSMC declined to elaborate, saying it does not comment on market rumors.

Taiwan's Economic Daily News first reported that TSMC was weighing Texas, and Reuters followed Wednesday, Quartz noted. Bloomberg's report added the multi-fab scale, the per-fab cost, the tax-credit condition and the Singapore talks.

Why It Matters

At $20 billion or more per fab, even a two-plant Texas campus would cost at least $40 billion and would make TSMC a two-state chipmaker in the U.S. The company's American customers give it a strong reason to add capacity there: according to Quartz, North American clients account for more than 75% of TSMC's wafer revenue so far this year. Demand for AI chips has stretched the company's advanced-node capacity, and Quartz reported that its equipment purchases have doubled from a year earlier.

The tax-credit link makes the project a test of U.S. industrial policy. The 35% credit substantially lowers the cost of building fabs, and its expiration would raise the bill for any project not yet underway. That puts the decision partly in the hands of a lame-duck Congress, where Crapo and Wyden, the top Republican and Democrat on the Senate Finance Committee, would need to find a bill to carry an extension.

Context

Texas already hosts significant chip manufacturing, including Samsung's complex and Texas Instruments operations, Bloomberg noted. Outside the U.S., TSMC operates a plant in Kumamoto, Japan, with Sony as a partner and is building in Saxony, Germany. Talks with Singapore would add another potential site in Asia outside Taiwan, where most of TSMC's leading-edge production remains.

DIGITIMES, following the reports late Thursday, described Texas as a possible second major American production hub alongside Arizona.

What to Watch

The near-term signal is whether Congress extends the advanced-manufacturing credit before it expires Dec. 31, and through which bill. After that, a site announcement or state incentive package in Texas would confirm the plan. Any statement from Singapore's government about TSMC talks, or a TSMC capital spending update at its next earnings report, would also indicate where the company intends to put its next wave of capacity.