Taiwan-Arizona ties: the history behind TSMC’s decision to build US$12 billion chip plant in southwestern US

Arizona’s long-standing support for Taiwan, going back to the 1960s, underscores the increasing importance of subnational diplomacy for the self-ruled island

TSMC likely did not invest in Arizona for political purposes, experts say, but a state’s ties to Beijing could affect Taiwanese business decision-making

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Arizona’s support for Taiwan goes back to the mid-20th century, helping lay the groundwork for what became the largest foreign direct investment project in the US. Illustration: Davies Christian Surya

Published: 10:00am, 24 Jun 2023

This is the second of a two-part series looking at how Arizona was chosen as the US state to host the latest semiconductor wafer fabrication plant from TSMC, the world’s leading chip foundry, in a move that is redefining geopolitical boundaries in the global chip industry.

When the southwestern US city of Phoenix landed a deal in 2020 for a US$12 billion chip-making plant from Taiwan Semiconductor Manufacturing Co (TSMC), it became the biggest payoff for the state of Arizona after seven years of courting business from the self-ruled island that China claims as its own.

But the state has for decades been building close ties with Taiwan, even as it has been middle-of-the-pack among states in taking a hard line against mainland China, illustrating how long-term subnational diplomacy helps Taiwan expand its soft power abroad as Beijing tries to siphon off Taipei’s remaining national allies.

Groundwork for the TSMC deal was first laid when an Arizona delegation visited Taipei in 2013, with then-governor Jan Brewer and Arizona Commerce Authority President and CEO Sandra Watson. However, it was not until years after her successor Doug Ducey took office that plans for a plant in northeast Phoenix started to solidify, aided in large part by a US-China tech war and promises of federal government subsidies that would later be formalised in the Chips Act.

“The previous administration and the current administration both played roles in this process, because it was a multi-year effort,” Chris Camacho, president and CEO of the Greater Phoenix Economic Council (GPEC), which was involved in discussions to bring TSMC to the city, told the Post in January. “That was a part of the discussion to get them to come to the United States, was ensuring that the Chips Act would move forward.”

Since TSMC’s announcement, Phoenix has seen at least 14 other companies, five of them Taiwanese, announce related expansions to the metropolitan area, according to the GPEC. The chip giant’s investment in Arizona is expected to eventually create 4,500 direct jobs, and 7,400 indirect jobs.