TSMC Arizona: What the U.S. Award and Taiwan Approval Actually Cover

As of October 3, 2026, three public figures describe different parts of TSMC's Arizona expansion. The U.S. Department of Commerce awarded TSMC Arizona up to $6.6 billion in direct CHIPS funding in November 2024 for a project then planned at more than $65 billion. TSMC's announced U.S. investment plan reached $265 billion in July 2026. Taiwan's Ministry of Economic Affairs, meanwhile, approved a US$20 billion capital increase into TSMC Arizona on July 2, 2026.

For a U.S. equipment maker, materials supplier or engineering partner, those figures cannot be substituted for one another. The first concerns a federal funding agreement, the second a company's stated investment plan, and the third a Taiwan regulatory decision on a particular outbound investment. Each answers a different question about who may spend money, what project a public commitment describes and which conditions attach to a transaction.

The CHIPS award describes a defined project

The November 15, 2024 Commerce announcement names TSMC Arizona Corporation, a TSMC subsidiary, as the award recipient. It describes more than $65 billion of planned private investment in three greenfield fabs in Phoenix. The direct award is “up to” $6.6 billion, with disbursements tied to project milestones. Commerce also described up to $5 billion in proposed loans. Neither the direct award ceiling nor the loan figure is an account of cash already paid to the company.

TSMC later enlarged its ambitions. A March 2025 company release raised its stated U.S. plan to $165 billion and added proposed fabs, advanced packaging facilities and an R&D center. The July 2026 announcement added another $100 billion of planned investment, producing the $265 billion total. The figure is a plan, not a reported expenditure or a revised amount of CHIPS aid. The publicly available 2024 award announcement does not say that each later facility is covered by the original funding commitment or on identical terms.

That difference matters in procurement. A supplier may be asked to price equipment for a facility described in a later expansion announcement, while the purchase order calls the broader undertaking a “CHIPS project.” The label alone does not identify which construction phase, recipient entity, milestone or contractual reporting duty applies. The counterparty can provide the relevant project definition and any terms it requires the supplier to follow. A public press release cannot supply the missing details of a private award agreement.

The payment sequence is also narrower than an ordinary headline suggests. According to Commerce, direct funding follows construction, production and commercial milestones; the program tracks recipients through financial and program reports. If a supplier's payment is tied to installation acceptance or a factory's production milestone, its contract should say which event triggers payment and who certifies completion. The federal award's milestone schedule and a supplier's invoice schedule are separate instruments unless the parties connect them in their agreement.

The expansion guardrail addresses countries of concern

The main geographic CHIPS restriction appears in 15 CFR 231.202. For ten years from the award date, a covered award recipient and members of its affiliated group may not enter a significant transaction involving material expansion of semiconductor manufacturing capacity in a foreign country of concern, subject to the rule's stated exceptions. Commerce's guidance explains that material expansion includes construction of a new semiconductor manufacturing facility; at an existing facility, a physical addition that increases the capacity recorded in the required agreement by more than five percent also qualifies.

The destination is an element of this rule. Commerce's published guidance, checked October 3, 2026, identifies China, Iran, North Korea and Russia as the covered nations underlying its discussion of a foreign country of concern. Taiwan is not in that list. An Arizona facility plainly is not in one of those countries either. It would therefore misstate this specific expansion guardrail to say that a CHIPS recipient is barred by it from manufacturing in Taiwan merely because the recipient received federal funding.

That conclusion does not erase the rule for a cross-border corporate group. An affiliate's proposed manufacturing expansion in a country of concern may enter the analysis, even where the U.S. facility being supplied is in Arizona. Under 15 CFR 231.301, a covered entity must notify Commerce of a planned significant transaction that may involve such expansion, including one by an affiliated group member. The recipient must identify the contemplated transaction, the facility and the relevant entities before judging whether an exception or notice procedure applies. A component vendor cannot establish those facts from the country printed on a delivery address.

The rule's direct addressee also matters. Commerce says the guardrails apply to covered entities that have a CHIPS agreement with the department. Supplying valves, chemicals or software to a recipient does not by itself make an independent vendor a covered award recipient. The vendor may still be subject to representations, origin rules, data obligations or audit provisions in its own contract. The source of those duties is the agreement or another applicable law, not automatic conversion into the grant recipient.

Joint research has a different CHIPS test

The technology restriction in 15 CFR 231.203 is framed differently. During the applicable term of a federal award, a covered entity may not knowingly engage in joint research or technology licensing with a foreign entity of concern concerning a technology or product that raises national security concerns, subject to the rule's provisions. The expansion restriction uses a ten-year period and a country-based manufacturing test. The technology restriction uses the applicable award term, the counterparty's status and the subject of a research or licensing effort. The two clocks and two tests should not be merged.

“Foreign entity of concern” also does not mean every overseas engineering partner. Commerce's FAQ distinguishes it from a foreign country of concern and discusses ownership, control, sanctions and listed-entity criteria. A supplier that shares technical data with a Taiwan team needs to identify the legal entity receiving it, any relevant ownership links and the nature of the collaboration. Its location alone cannot settle the counterparty-status question.

These are CHIPS funding conditions, and they sit beside other regulatory systems. A U.S. export license, when one is required and issued, is not a waiver of the CHIPS technology guardrail. Conversely, a CHIPS analysis does not grant permission to export controlled technology. The two determinations belong in the same project record, with the scope and authority for each stated separately.

Taiwan's approval covered a US$20 billion capital increase

The Taiwan decision is unusually concrete. TSMC's May 12, 2026 board announcement authorized a capital injection of up to US$20 billion into TSMC Arizona. The Ministry of Economic Affairs later reported that its Investment Review Committee, at its July 2 meeting, approved TSMC's US$20 billion capital increase into the Arizona corporation for 12-inch wafer fabs and advanced packaging facilities. The board decision was a corporate authorization; the ministry decision was an outbound investment approval. The ministry's published summary does not purport to approve the entire US$265 billion U.S. plan announced later that month.

Taiwan's current outbound investment framework explains why the ministry appears in the transaction. The operative text of Article 22 of the Industrial Innovation Act requires a company to obtain central-authority approval before making an outbound investment, except that an investment of no more than NT$1.5 billion may be reported afterward. The Ministry's Regulations Governing the Handling of Companies' Outbound Investments, Articles 5 and 9, specify a pre-investment application above NT$1.5 billion and permit an investment at or below that amount to be approved beforehand or reported within six months after implementation. Those are rules for the Taiwan investing company; a U.S. seller does not file Taiwan's outbound investment application simply because it sells equipment into Arizona.

The same regulations make clear that an outbound contribution need not consist only of cash. Article 4 includes machinery, components, specialized technology and intellectual property among permitted contribution types, subject to other applicable laws. Article 6 permits the ministry to refuse approval on specified grounds, including national security, adverse effects on economic development and infringement of intellectual property rights. For a proposed transfer, parties should identify whether an asset is being contributed to an overseas investment or licensed or sold under a separate commercial arrangement. Its legal treatment cannot be inferred from the fact that both transactions support the same fab.

There is a significant effective-date trap. The May 7, 2025 amended Article 22 displayed in Taiwan's statute database would use designated countries or regions, industries or technologies, and investment amounts to determine preapproval. The same official page expressly says the effective date for that amendment has not yet been set by the Executive Yuan. As checked October 3, 2026, those new categories cannot be presented as the operative test. For a live transaction, the investor should check whether an effective-date order has since appeared before relying on this account.

Core technology rules concern designated trade secrets

Taiwan's rules on national core critical technologies raise a related but distinct question. Article 3 of the National Security Act addresses specified wrongful acts involving trade secrets that embody designated national core critical technologies. Its text covers, among other conduct, improper acquisition, unauthorized or beyond-authority copying, use or disclosure for listed foreign recipients, and such acts done with intent to use the secret abroad. The law does not say that every transfer of know-how from Taiwan to the United States is prohibited.

The information must first qualify as a trade secret. Article 2 of Taiwan's Trade Secrets Act requires that it not be generally known to persons in the relevant field, that secrecy give it actual or potential economic value, and that the owner have taken reasonable secrecy measures. The national-core-technology designation and the particular conduct under Article 3 are further elements. Taiwan's National Science and Technology Council, when announcing its initial core-technology designations in December 2023, said the mechanism targeted misappropriation of secrets and did not impede lawful commercial activity and technology exchange. The designation list can change; a current project needs the list in force at the time of the contemplated transfer.

For partners, the practical issue is permission at the level of the information and the recipient. A facilities contractor's public installation manual is different from a restricted process file. A supplier's own independently developed calibration method is different from a customer's confidential recipe. Even within an authorized project, the contract may permit access for installation in Arizona without permitting copies to be retained elsewhere or used for another customer's line. Our separate column on Taiwan trade-secret disputes discusses how ownership, access and proof can become contested. That column does not imply TSMC was involved in the dispute.

A supplier contract ties the work to a facility and phase

Consider a hypothetical U.S. metrology supplier working on an unnamed Arizona fab. Its service team needs remote support from Taiwan, and its equipment can generate diagnostic files containing both the supplier's software settings and the customer's process data. Nothing in those facts alone establishes a CHIPS violation or a Taiwan trade-secret offense. They do create different permissions to specify: who owns each dataset, who may receive it, where it may be accessed, how long copies may remain, and whether the supplier may reuse information to improve its products. The contract should also say whether remote troubleshooting is part of installation, a separate R&D effort or a technology license. Those descriptions affect the legal questions; a blanket label of “technical support” may conceal the distinction.

The commercial timeline should be just as exact. The 2024 CHIPS award's public milestone language does not tell the supplier when its own invoice is payable. Taiwan's July 2026 approval identifies a US$20 billion contribution, but it does not replace the supplier's purchase order, financing terms or acceptance criteria. A document set that links the recipient entity, facility, project phase, deliverables, permitted information flows and payment trigger will be more useful than a recital that the Arizona investment has “government approval.” Where an approval is material to performance, the parties can identify that approval by date, authority and approved transaction, and state what happens if a later phase requires a further decision.

For an initial Taiwan-law inquiry, contact partner and attorney Wei Tseng (曾雋崴) at Hovering International Law Firm: wei@hoveringlaw.com.tw. Send a non-confidential outline first. Taipei office: 7F-2, No. 35, Sec. 1, Chengde Rd., Datong Dist., Taipei City 103, Taiwan.

More columns for semiconductor companies

Sources

All sources below were opened and checked October 3, 2026 (Taiwan time).

• U.S. Department of Commerce / NIST, Biden-Harris Administration Announces CHIPS Incentives Award with TSMC Arizona, November 15, 2024.
• TSMC, TSMC Intends to Expand Its Investment in the United States to US$165 Billion to Power the Future of AI, March 4, 2025.
• U.S. Department of Commerce / NIST, Trump Administration Secures an Additional $100 Billion U.S. Semiconductor Manufacturing Investment for a Total of $265 Billion from TSMC, July 16, 2026.
• U.S. Electronic Code of Federal Regulations, 15 CFR part 231, Clawbacks of CHIPS Funding, current text checked October 3, 2026; cited sections 231.202, 231.203 and 231.301.
• U.S. Department of Commerce / NIST, Frequently Asked Questions: Preventing the Improper Use of CHIPS Act Funding, updated October 6, 2025.
• TSMC, TSMC Board of Directors Meeting Resolutions, May 12, 2026.
• Taiwan Ministry of Economic Affairs, Investment Review Committee, Press release on the 32nd committee meeting, July 2, 2026.
• Taiwan Ministry of Justice, Laws & Regulations Database, Industrial Innovation Act, operative historical Article 22, June 28, 2023 text, and amended Article 22 with effective-date notice, amendment dated May 7, 2025; status checked October 3, 2026.
• Taiwan Ministry of Economic Affairs, Regulations Governing the Handling of Companies' Outbound Investments, Articles 4–6 and 9; current text checked October 3, 2026.
• Taiwan Ministry of Justice, Laws & Regulations Database, National Security Act, Article 3, current text checked October 3, 2026.
• Taiwan Ministry of Justice, Laws & Regulations Database, Trade Secrets Act, Article 2, current text checked October 3, 2026.
• Taiwan National Science and Technology Council, Announcement of national core critical technologies and trade-secret protection, December 5, 2023.

General information, not individualized legal advice. Sources checked October 3, 2026 (Taiwan time).