Investigating TSMC’s Chip Expansion Claims: A Critical Analysis

Executive Summary

This report critically examines the core tension between the public narrative of Taiwan Semiconductor Manufacturing Co. (TSMC) and the significant, understated risks of its global expansion. Our investigation finds no evidence of fraud. However, it identifies a pattern of strategic misrepresentation. This pattern downplays the complexities and vulnerabilities of its U.S. expansion.

The primary risk to TSMC and its stakeholders is not deception. It is a high probability of execution failure. This means an inability to meet ambitious timelines and cost targets in a new, challenging environment.

Key findings include:

• A critical dependency on Taiwan for advanced chip packaging, which undermines the U.S. goal of supply chain resilience.¹
• High execution risk in Arizona, driven by soaring costs and documented operational delays that conflict with optimistic official timelines.²

This report concludes with actionable recommendations. It urges policymakers and investors to shift focus from mere wafer fabrication to securing the entire supply chain. It also recommends implementing rigorous milestone verification for subsidies and applying a significant risk premium to account for the substantial challenges ahead.

Introduction

Does the triumphant narrative surrounding Taiwan Semiconductor Manufacturing Co.’s (TSMC) global expansion accurately reflect the project’s underlying risks? This document addresses that critical question. TSMC is expanding its advanced semiconductor manufacturing in both Taiwan and the United States to meet surging demand for artificial intelligence (AI) chips.³

This investigation applies a skeptical framework to assess whether the public narrative of seamless progress aligns with the technical, financial, and geopolitical realities. It probes for unstated risks and potential strategic misrepresentation. This analysis of the narrative’s architecture, the plausibility of its claims, and unstated external pressures forms the foundation of this inquiry.

I. Deconstructing the Public Narrative

1.1 Who is Shaping the Narrative?

The narrative surrounding TSMC’s expansion is not monolithic. It is a carefully constructed mosaic of information. This information originates from a diverse but interconnected set of sources.

Established Taiwanese media outlets like the Taipei Times⁴ and Focus Taiwan⁵ often serve as conduits for official statements. Government bodies such as the Central Taiwan Science Park Bureau use these outlets, lending a state-sanctioned imprimatur to the claims.⁴

Specialized technology publications provide more technical depth and context, including WCCFtech,⁶ TweakTown,⁷ HPCwire,⁸ and EE Times.⁹ Financial news agencies like the Associated Press¹⁰ and the Financial Express¹¹ amplify the strategic implications for a broader investor audience. Finally, direct corporate communications, including TSMC’s website¹² and quarterly investor calls,¹³ anchor the foundational claims.¹⁴

Crucially, key stakeholders play a prominent role in the Arizona expansion narrative. Nvidia’s CEO, Jensen Huang, has emerged as a primary amplifier. His pronouncements at the Arizona facility are widely quoted and consistently framed as historic, nation-building events.⁸

1.2 Linguistic Framing and Tone

The language used to describe these expansions is overwhelmingly positive. It is strategically framed around two powerful meta-narratives: the inevitability of the AI revolution and the strategic imperative of American industrial policy.

Sources consistently characterize the demand for AI chips with superlatives. They use terms like “surging,” “robust,” “unyielding,” “insatiable,” and even “insane”.³, ¹⁰, ¹¹ This linguistic choice creates a sense of urgency that justifies the massive capital expenditures and accelerated timelines.

Concurrently, the Arizona announcements are explicitly tethered to a potent political narrative of American “reindustrialization.”

“This is the vision of President Trump of reindustrialization–to bring back manufacturing to America, to create jobs, of course, but also, this is the single most vital manufacturing industry and the most important technology industry in the world.”

— Jensen Huang, CEO, Nvidia⁸

This framing is a masterful strategic maneuver. It aligns a corporate project with a national objective. It also serves to validate the substantial government subsidies provided under the CHIPS and Science Act, transforming a business decision into a patriotic act.

The overall tone is celebratory. Terms like “historic moment” and “milestone” imbue the events with profound significance.⁸ The conspicuous absence of independent, third-party expert commentary within these primary announcements is noteworthy. The narrative functions not merely as a report of facts but as a strategic instrument, with policymakers and investors as its primary audience. This alignment is crucial for securing support for the massive CHIPS Act subsidies, which include up to $6.6 billion in direct funding and $5 billion in loans.¹⁵

1.3 Evidence and Substantiation

The evidence presented reveals a hierarchy of verifiability. The specific, quantifiable claims regarding the A14 process technology are remarkably consistent. These claims include a 15% speed improvement at the same power or a 30% power reduction at the same speed.⁴, ⁷, ¹⁶, ¹⁷ Crucially, TSMC’s own corporate website directly corroborates these figures.¹⁶ This direct traceability suggests a high degree of confidence in the claim’s origin.

Similarly, the impressive financial data is solid. Reports of record-breaking Q3 2025 results are sourced directly from TSMC’s official earnings releases and investor calls.¹¹, ¹³, ¹⁰ These are legally mandated disclosures, providing a verifiable foundation for assessing the company’s financial health.

In contrast, claims regarding the accelerated production timelines in Arizona are less concrete. These assertions are frequently attributed to forward-looking statements by CEO C.C. Wei during quarterly earnings calls.¹⁸ While these statements indicate strategic intent, they are not guarantees. The specific, revised timelines for bringing N3, N2, and A16 nodes online in the U.S. are not consistently reported, suggesting “acceleration” may be more of a strategic ambition than a locked-in schedule.¹⁸, ¹⁹

II. Scrutinizing the Technological Claims

This section scrutinizes the core scientific and engineering claims. The objective is to critically evaluate the plausibility of TSMC’s announced technology roadmap. It identifies significant technical risks, unstated dependencies, or potential overstatements.

2.1 The A14 (1.4nm) Claim: A Calculated Risk

TSMC’s roadmap positions the A14 (1.4nm) process for mass production in the second half of 2028.⁶, ²⁰, ²¹ The headline performance claims are a 15% speed improvement or a 30% power reduction compared to the N2 (2nm) process.⁷, ¹⁶

The most critical technical detail is TSMC’s decision to not employ the next generation of High-NA (High Numerical Aperture) Extreme Ultraviolet (EUV) lithography machines from ASML for the A14 node.⁶, ²¹ The rationale is explicitly financial: each High-NA EUV machine costs a “ludicrously expensive” $400 million per unit.⁶, ²¹

Instead, the company will rely on its current EUV tools combined with more complex and costly multi-patterning techniques.⁶ This approach involves etching a single layer on a wafer in multiple steps. This method is known to result in lower initial yields and necessitates a “trial and error” approach to refine the process.⁶ This strategy introduces significant execution risk. A failure to achieve competitive yields could delay the A14 node and cede technological leadership to competitors like Intel, which is betting heavily on High-NA EUV.²², ²³

2.2 The Arizona Roadmap Acceleration: Feasibility Under Pressure

The narrative of an accelerated roadmap in Arizona presents a stark contrast with documented on-the-ground realities. The claim is that TSMC is fast-tracking the introduction of its N3, N2, and even A16 process technologies at its Phoenix site.⁸, ¹⁸

This represents a monumental undertaking. Stabilizing even a single new process node is an incredibly complex, multi-year endeavor. Attempting to ramp multiple, successive nodes in a compressed timeframe, in a new country, presents an exponential increase in execution risk. This risk is compounded by factors TSMC’s leadership has acknowledged:

• Construction costs in the U.S. are four to five times higher than in Taiwan.¹⁹, ²⁴
• The project faces significant challenges related to labor, “red tape,” and establishing new supply chains.¹⁹, ²⁵

Furthermore, public reports detail significant operational friction at the Arizona site. These include construction delays, safety issues, and contentious disputes with local labor unions.², ²⁶ These ground-level realities conflict with the optimistic public narrative of rapid progress. The table below illustrates the immense challenge of compressing a sequential roadmap from Taiwan into a parallel plan in Arizona.

Table 1: TSMC Technology Roadmap & Timeline (Taiwan vs. Arizona)

Process Node	Stated Mass Production Timeline (Taiwan)	Stated Mass Production Timeline (Arizona)	Key Technology	Known Challenges/Dependencies
N4 (4nm)	2022 (In Production)	H1 2025 (Fab 1)¹⁵	FinFET	Initial production node in a new geography.
N3 (3nm)	2022 (In Production)	2028 (Fab 2)¹⁹	FinFET	Construction completed, equipment move-in and ramp-up.
N2 (2nm)	H2 2025²⁷	2029 (Fab 3)¹⁹ or accelerated to H2 2026/2027¹⁸, ²⁷	Nanosheet (GAA)	Introduction of new transistor architecture in a new fab.
A16 (1.6nm)	H2 2026⁴	2029 (Fab 3)⁸ or accelerated to 2027²⁷	Nanosheet + BSPDN	Introduction of backside power delivery.
A14 (1.4nm)	H2 2028⁴, ⁶, ²⁰	Not Announced	Nanosheet (GAA)	Relies on risky multi-patterning instead of High-NA EUV.

2.3 The CoWoS Dependency: The Achilles’ Heel of US Supply Chain Resilience

The most significant unstated risk in the onshoring narrative is the dependency on TSMC’s proprietary advanced packaging technology, Chip-on-Wafer-on-Substrate (CoWoS).²⁸, ²⁹, ³⁰ Modern AI accelerators, like Nvidia’s Blackwell GPU, are not monolithic chips. They are complex systems-in-a-package that require integrating the primary logic die with multiple stacks of High-Bandwidth Memory (HBM).²⁸ CoWoS is the essential technology that enables this integration.²⁹, ³⁰

A critical detail is that Nvidia Blackwell wafers produced at TSMC’s Arizona fab must be shipped back to Taiwan for this essential CoWoS packaging step.³¹ This logistical reality, illustrated below, creates a profound strategic contradiction.

 ---> ---> ---> ---> [Final Assembly & Global Market]

The primary geopolitical objective of the CHIPS Act is to create a secure domestic supply chain. However, if the final AI accelerators cannot be completed without being sent back into that geopolitical hotspot, the supply chain remains fundamentally insecure.

This dependency creates a “hollowed-out” supply chain. It relocates wafer fabrication to U.S. soil but leaves the final, value-adding packaging step exposed to the original geopolitical risk. While TSMC has announced intentions to build advanced packaging facilities in Arizona, the specific timelines and capabilities for high-volume CoWoS are not detailed.¹⁹

III. Analyzing Financial and Corporate Structures

This phase follows the flow of capital to assess the financial soundness, transparency, and corporate governance underpinning TSMC’s expansion plans.

3.1 Capital Expenditure and Funding Sources

The scale of investment required is immense.

• A14 Fab (Taiwan): The planned facility in Taichung carries an initial investment projection of approximately $49 billion USD.⁷, ²¹, ³²
• Arizona Gigafab (USA): The investment in Arizona has escalated dramatically. The commitment has grown from an initial $12 billion to a potential $165 billion for a comprehensive six-fab cluster.⁸, ¹⁹, ³³

TSMC’s formidable financial strength supports this colossal expenditure. The company’s Q3 2025 earnings report shows a healthy operating cash flow of approximately $13.9 billion and a balance sheet fortified with $90 billion in cash and securities.¹¹, ¹³ This allows TSMC to finance a significant portion of its expansion through internally generated funds.³⁴

However, direct financial support from the U.S. government substantially de-risks the Arizona expansion. Under the CHIPS and Science Act, TSMC is set to receive up to $6.6 billion in direct grants and has been offered up to $5 billion in loans.⁸, ¹⁵ The company can also leverage Investment Tax Credits covering up to 25% of qualified capital expenditures.¹⁵

3.2 Business Model, Revenue, and Profitability

TSMC’s “pure-play” foundry model continues to be exceptionally successful. In Q3 2025, technologies of 7nm and smaller accounted for a remarkable 74% of total wafer revenue.¹¹ The High-Performance Computing (HPC) segment, which includes AI accelerators, has become the dominant revenue engine, constituting 57% of revenue.¹³

This market dominance translates into extraordinary profitability. For Q3 2025, TSMC reported a gross margin of 59.5% and an operating margin of 50.6%.¹¹, ¹³

A key risk to this financial model is the higher cost of overseas operations. TSMC’s management explicitly addressed the gross margin dilution resulting from its overseas fabs.¹³ The Arizona fabs are a structural drag on the company’s financial efficiency. This indicates that while the U.S. expansion is strategically necessary, it comes at a direct cost to profitability. This dynamic creates a dependency on government subsidies for long-term operational viability.

3.3 Leadership and Corporate History

The investigation of TSMC’s leadership reveals no red flags. The company’s history is one of stable, technically proficient, and highly respected leadership. Its founder, Dr. Morris Chang, is a revered figure who pioneered the pure-play foundry model.³⁵, ³⁶

This legacy of stable, expert leadership continues. The current Chairman and CEO, Dr. C.C. Wei, is a long-serving insider with a deep background in electrical engineering.³⁷ The broader executive team is composed of seasoned veterans with decades of experience within TSMC or other major semiconductor firms.³⁷

3.4 Corporate Structure and Transparency

TSMC operates with a high degree of corporate transparency. The company is publicly traded on both the Taiwan Stock Exchange (TWSE: 2330) and the New York Stock Exchange (NYSE: TSM).¹⁴ This subjects it to the rigorous financial reporting and disclosure requirements of two major international regulatory regimes.

The company maintains a comprehensive investor relations program. It provides detailed quarterly financial results, hosts regular investor conference calls, and files annual reports with the U.S. SEC.¹³, ³⁸

IV. The Geopolitical Context

TSMC does not operate in a commercial vacuum. It is a central and strategic asset on a global geopolitical chessboard. Its decisions are heavily influenced by powerful external forces, national security considerations, and the strategic imperatives of global superpowers.

4.1 State-Actor Affiliation: The CHIPS Act Entanglement

The most significant external influence on TSMC’s strategy is its direct financial partnership with the United States government. Through the CHIPS and Science Act, the U.S. has become a primary stakeholder in the Arizona expansion, committing up to $6.6 billion in direct grants and $5 billion in loans.¹⁵

This funding, however, comes with a complex web of “strings attached” that subordinate business objectives to broader U.S. social and political goals. These stipulations include:³⁹, ⁴⁰, ⁴¹

• Financial Constraints: Provisions for “upside sharing” (profit clawbacks) and preferential treatment for companies that refrain from stock buybacks.
• Labor Mandates: Requirements for detailed childcare plans and strong encouragement to use union labor.
• Social Policy Directives: Submission of detailed plans for supplier diversity, community investment, and environmental responsibility.
• National Security Guardrails: A ten-year prohibition on the “material expansion” of advanced semiconductor manufacturing in “foreign countries of concern,” a designation aimed squarely at China.

These conditions represent a significant shift in TSMC’s operating reality. The company’s strategic decisions in the U.S. are now partially dictated by the need to comply with a wide-ranging set of non-manufacturing requirements.

4.2 Geopolitical and Defense Sector Links: The “Silicon Shield” Paradox

TSMC’s leading-edge semiconductors are the quintessential “dual-use” technology. They are indispensable for both commercial AI platforms and the most advanced military systems. This criticality places the company at the nexus of U.S. national security strategy and the stability of the Indo-Pacific region.

For years, Taiwan’s dominance in semiconductor manufacturing has been framed as its “Silicon Shield.” The theory is that its critical role in the global economy would deter a military invasion from China.⁴², ⁴³ However, this very importance creates a paradoxical vulnerability. The concentration of over 90% of the world’s advanced chip manufacturing on an island facing an existential military threat is a systemic risk.³⁴ This risk is multifaceted:

• Energy Insecurity: Taiwan is critically dependent on imported energy. A military blockade could sever liquefied natural gas (LNG) imports, bringing the industry to a halt within weeks.⁴², ⁴⁴, ⁴⁵
• Direct Military Threat: China’s frequent military exercises demonstrate a credible capability to enforce a blockade or launch an invasion, which would instantly sever global supply chains.⁴²

The Arizona expansion is an explicit strategic hedge against this extreme concentration risk.³⁴, ⁴³ However, the persistent dependency on Taiwanese facilities for advanced CoWoS packaging means this hedge is currently incomplete.

4.3 Key Market Dependencies and Sanction Risks

TSMC’s customer base heavily weights its strategic calculus. The company derives over 65% of its revenue from U.S.-based technology giants like Apple, Nvidia, and AMD.⁴³ This overwhelming dependence makes it a business necessity to align with U.S. strategic policy demands.

Simultaneously, TSMC must navigate complex U.S. export controls and sanctions targeting China’s technology sector.⁴³ This positions TSMC as a key instrument of U.S. technology policy but also makes it a potential target for Chinese retaliation.

This confluence of factors reveals a fundamental shift. Geopolitical pressures are now forcing a strategic fragmentation of TSMC’s historically hyper-concentrated model. New, less-efficient manufacturing clusters are being established in the U.S., Japan, and Germany.³⁴, ⁴³ This diversification reduces single-point-of-failure risk but also increases costs and introduces new operational complexities. TSMC is being compelled to trade peak performance for distributed resilience.

V. Identifying Black Swans and Blind Spots

This phase challenges prevailing assumptions. It actively seeks out high-impact, low-probability events (“Black Swans”) and areas where the investigation may have overlooked critical information (“Blind Spots”).

5.1 Identifying Potential Black Swans

Several potential Black Swan events could render TSMC’s projects unviable:

• A14 Technical Failure: The decision to use complex multi-patterning for the A14 node is a significant technical gamble.⁶ A fundamental physics or materials science limitation could prevent this method from achieving competitive yields, forcing a multi-billion-dollar pivot and potentially costing TSMC its technology leadership.
• Critical Supply Chain Collapse: The manufacturing process depends on a fragile global supply chain of specialized chemicals and equipment.⁴⁶, ⁴⁷, ⁴⁸ A disruption to a single-source supplier could halt leading-edge chip production globally.
• Geopolitical Miscalculation: A rapid, unexpected escalation of conflict in the Taiwan Strait before the Arizona fabs achieve fully independent production would render the onshoring effort moot.
• Environmental Constraints: The Arizona “gigafab” cluster will require immense quantities of water and electricity.³⁴ A severe drought or a cascading failure of the regional power grid could halt operations.

5.2 Uncovering Blind Spots: Challenging Assumptions

A rigorous analysis requires challenging the core assumptions of the prevailing narrative.

• Assumption: “AI chip demand is limitless and will justify any cost.”
  • Challenge: What if a breakthrough in algorithmic efficiency or a new computing paradigm dramatically reduces computational power needs? Such a shift could dampen demand for the most expensive nodes, potentially turning billion-dollar fabs into underutilized assets.⁴⁹
• Assumption: “TSMC’s flawless execution in Taiwan is directly transferable to the U.S.”
  • Challenge: This is directly contradicted by public reports from the Arizona site, which detail significant problems with management, labor, and safety.², ²⁶ The unique ecosystem cultivated over decades in Taiwan cannot be replicated quickly.

The strategic roadmaps of TSMC’s primary competitors provide the most credible sources of contradiction. The table below highlights the divergent paths in the race to the 1.4nm-class node.

Table 2: Competitive Landscape Analysis (Sub-2nm Foundry Roadmaps)

Foundry	Target 1.4nm-class Node	Target Production Year	Key Lithography Strategy	Reported Issues/Status
TSMC	A14 (1.4nm)	2028²⁰, ⁵⁰	Existing EUV + Multi-Patterning⁶, ²⁰	High execution risk due to avoiding High-NA EUV.
Intel	14A (1.4nm)	2026-2027 (Target)	High-NA EUV²³	High capital cost. Reports of low yields on preceding 18A node; company may need to exit manufacturing if foundry business fails.²³
Samsung	SF1.4 (1.4nm)	Pushed to 2029 or later; rumored to be under review or cancelled⁵⁰, ⁵¹	N/A	Facing significant delays, loss of market share, and customer trust issues. Struggling with yields on current advanced nodes.²³, ⁵¹

5.3 The Sound of Silence: What Information is Conspicuously Missing?

Sometimes the most important evidence is what is absent. Several key pieces of information are conspicuously missing from the public discourse:

• A Detailed Arizona CoWoS Plan: The single most significant omission is a concrete, funded, and scheduled plan for bringing high-volume CoWoS advanced packaging capacity online in Arizona. Without this, the narrative of a resilient U.S. AI chip supply chain has a fatal flaw.
• A Transparent US Fab Cost-Benefit Analysis: A detailed public analysis of the long-term operating costs, expected profitability, and break-even point for the Arizona facilities is absent, making it impossible to determine if this is a sustainable business venture or a permanently subsidized strategic asset.
• Independent Validation of A14 Multi-Patterning Feasibility: All claims about the viability of using multi-patterning to achieve 1.4nm feature sizes come from TSMC itself. There is no independent, third-party validation of this high-risk approach.

5.4 Unanswered Questions and Next Investigative Steps

A definitive assessment would require access to non-public information. The following key questions remain unanswered and would form the basis for any further due diligence:

1. The Arizona CoWoS Plan: What is the detailed, funded, and time-bound roadmap for establishing high-volume CoWoS advanced packaging capacity in Arizona?
2. A14 Process Viability: What are the specific, internal yield and cost-per-wafer targets for the A14 process using multi-patterning, and what are the contingency plans if those targets are not met?
3. CHIPS Act Agreement Terms: What are the specific financial terms of the “upside sharing” agreement with the U.S. government, and at what profitability threshold would a clawback of funds be triggered?

The next steps would require confidential due diligence, including a review of internal planning documents, supplier agreements, and the full terms of the CHIPS Act funding agreement.

VI. Synthesis and Conclusion

6.1 Connecting the Dots: Timing and Motivation

The timing of TSMC’s announcements appears strategically calculated. The high-profile celebration of the first U.S.-made Nvidia Blackwell wafer in October 2025 served as a powerful public demonstration of progress. This event provided political justification for the massive CHIPS Act investment.⁸, ⁵²

Simultaneously, confident pronouncements about the A14 (1.4nm) node serve a crucial competitive purpose. These announcements were made when rivals Intel and Samsung were facing public reports of struggles with their own advanced node roadmaps.²³, ⁵⁰, ⁵¹ By projecting an image of unwavering progress, TSMC can work to secure long-term customer confidence.

6.2 Consolidated Red Flag Assessment

The following table consolidates the key risks identified throughout this investigation.

Table 3: Consolidated Red Flag Assessment

Phase of Framework	Identified Red Flag / Risk	Supporting Evidence	Severity Assessment	Analyst Commentary
II. Technology	The CoWoS Packaging Bottleneck	³¹	High	This is the most critical flaw in the U.S. onshoring strategy. It undermines the core goal of supply chain resilience by keeping the final, essential packaging step for AI chips dependent on Taiwan.
II. Technology	Arizona Execution & Timeline Risk	¹⁹, ², ²⁶	High	There is a significant disconnect between the optimistic public narrative of accelerated timelines and documented on-the-ground reports of high costs, construction delays, and labor disputes.
II. Technology	A14 Non-High-NA EUV Gambit	⁶, ²⁰	Medium	A calculated technical risk to save on massive capital expenditure. Failure to achieve competitive yields would be a major setback, but TSMC’s deep EUV expertise provides a mitigating factor.
IV. Geopolitics	Geopolitical Subsidy Trap	¹⁵, ³⁹, ⁴⁰, ⁴¹	Medium	The Arizona project’s financial viability is dependent on U.S. government funding, which comes with significant non-manufacturing “strings attached,” trading operational autonomy for geopolitical security.
V. Black Swans	Environmental & Infrastructural Risk	³⁴	Medium	The long-term success of the Arizona gigafab creates a new concentration risk, making a significant portion of the U.S. advanced chip supply vulnerable to regional water and power scarcity.
I. Narrative	Strategic Misrepresentation	⁸, ⁵²	Low	The narrative is heavily managed for political and PR purposes, but the underlying project is real. This is more a case of exaggerated marketing than outright deception.

6.3 Conclusion: A Spectrum of Plausibility

This investigation finds no direct evidence of scientific, engineering, or financial fraud. TSMC is a legitimate, highly advanced, and financially transparent global leader. Its financial reports are robust, its leadership is stable, and its technological claims are rooted in a consistent history of innovation.

However, the analysis reveals significant indicators of strategic misrepresentation and the downplaying of substantial, unstated risks, particularly concerning the Arizona expansion. There is a fundamental disconnect between the stated political goal (a resilient U.S. supply chain) and the practical reality (the CoWoS dependency, extreme costs, and documented construction challenges).

This distinction is crucial. Strategic misrepresentation can erode long-term investor confidence and lead policymakers to make decisions based on an incomplete picture of supply chain vulnerabilities. In contrast, execution failure is an operational risk that must be priced into any investment or policy decision.

The situation is best characterized not as fraud, but as a high-stakes, high-risk strategic pivot driven by geopolitical necessity rather than pure business optimization. The primary risk is not deception, but one of execution failure. The venture in Arizona risks becoming a permanently subsidized strategic asset whose financial returns may never match the efficiency of its Taiwanese counterparts.

6.4 Actionable Recommendations

To navigate the identified risks, this report offers the following recommendations for key stakeholders:

For Policymakers:

• Secure the Full Supply Chain: Shift policy focus from merely onshoring wafer fabrication to securing the entire end-to-end supply chain. Prioritize incentives for critical bottlenecks, especially advanced packaging technologies like CoWoS.
• Implement Rigorous Milestone Verification: Tie the disbursement of CHIPS Act funds to the achievement of concrete, independently verified construction and production milestones, including yield rates and cost controls.
• Invest in the Ecosystem: Bolster federal and state investment in the broader ecosystem, including specialized workforce training programs, materials science research, and incentives for critical suppliers.

For Investors:

• Scrutinize Execution Risk: Apply a significant risk premium to valuations that accounts for the high probability of delays, cost overruns, and lower margins associated with the Arizona project.
• Focus on Key Metrics: Look beyond headline revenue. Closely monitor quarterly reports for specific metrics on Arizona fab yields, cost-per-wafer, and project timelines. Compare these against the performance of TSMC’s Taiwanese fabs.
• Track the CoWoS Bottleneck: The onshoring of advanced packaging is the single most important catalyst for de-risking the U.S. supply chain. Prioritize due diligence on TSMC’s concrete plans and capital commitments for establishing a domestic CoWoS capability.

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