TSMC’s Arizona Chips Sent Back to Taiwan for Packaging; U.S. Semiconductor Supply Chain Continues Dependence on Taiwan

The United States is making strides toward a self-reliant chip supply chain, yet recent developments indicate that full independence has not yet been realized. A new report reveals that chips produced at TSMC’s facility in Arizona are being flown back to Taiwan for packaging in response to soaring demand driven by the artificial intelligence (AI) sector.

Packaging Challenges Force TSMC to Rely on Taiwan

Air cargo services are experiencing an uptick in demand across North America, primarily because TSMC is struggling to find adequate packaging options in the U. S.According to a report from the Taiwan Economic Daily, TSMC has been transporting fully-prepared wafers back to Taiwan for necessary packaging. This step is crucial to meet the needs of AI server manufacturers, as the Arizona facility lacks the required packaging capabilities for high-profile clients like NVIDIA. The current situation makes air transport a more expedient choice than establishing new facilities in the U. S.at this time.

One of the notable beneficiaries of this logistical dilemma is Eva Air, a Taiwanese airline that has reported a significant increase in demand for air freight services, particularly following the announcement of TSMC’s U. S.operations. Initially, the influx of AI server orders saw a slowdown during the imposition of tariffs by President Trump back in April. However, since the lifting of these tariffs, companies have resumed placing large orders, creating a backlog at TSMC’s Taiwan facilities and necessitating the transfer of some production to Arizona.

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Despite these adjustments, the U. S.chip supply chain still faces significant challenges. TSMC previously announced a $165 billion investment to enhance its U. S.operations, including the establishment of advanced packaging facilities responsible for technologies like CoWoS and its derivatives. However, progress on these initiatives appears stagnant. While transporting chip wafers to Taiwan incurs additional expenses, neither TSMC nor its partners seem to be dissuaded, as the current AI demand surges, particularly for NVIDIA’s server solutions.

Looking ahead, there is cautious optimism regarding the U. S.chip supply chain’s trajectory. Projections suggest that by 2032, the domestic market will meet over 50% of its own demand, underscoring the effectiveness of President Trump’s chip policies. TSMC is also planning to expand its production capabilities further, with ambitions to develop 1.6nm (A16) chips in the U. S., signaling a promising future for the American semiconductor industry.

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