Taiwan Semiconductor Manufacturing Co (TSMC) is evaluating a new campus in Texas that would add tens of billions of dollars to its multiyear US expansion, according to people familiar with the plans.

The company, which supplies Nvidia and Apple, is examining additional overseas facilities to handle sustained demand for artificial intelligence hardware. TSMC has already committed US$265 billion to a site in Arizona, where it is developing several fabrication plants. The envisioned Texas investment would also involve multiple fabs, one of the people said.

North America accounts for more than 75 per cent of TSMC's wafer revenue so far this year. AI silicon designers such as Nvidia and Advanced Micro Devices place large orders for some of its most advanced technology. The AI boom has strained existing capacity: TSMC has had to roughly double its planned equipment purchases over the past year to keep up with demand, deputy co-chief operating officer Cliff Hou said last month.

If TSMC proceeds in Texas, the project would encompass multiple chipmaking plants, each costing at least US$20 billion, according to one of the people. The plans remain at an early stage, and the sources asked not to be identified because the details are not public.

Tax credit is a condition

The potential Texas investment depends on US legislators extending an advanced-manufacturing tax credit set to expire at the end of this year, one of the people said. The credit was a cornerstone of former president Joe Biden's 2022 Chips Act. Lawmakers increased it to 35 per cent and extended it last year. An extension has yet to find a viable path to passage this year, but Senator Mike Crapo, an Idaho Republican, and Senator Ron Wyden, an Oregon Democrat, have said they are committed to it.

Texas already has a substantial semiconductor base. South Korea's Samsung Electronics operates an extensive chip production complex there, and Elon Musk is developing his Terafab project, which will supply chips for his business empire, in the state.

TSMC executives, including CEO CC Wei, have consistently said international expansion serves customer demand and depends on cooperation and support from local governments. Beyond Arizona, the company is building plants in Kumamoto, Japan, in partnership with Sony Group, and has a nascent project in Saxony, Germany.

Taiwan's Economic Daily News first reported TSMC's consideration of Texas earlier this week.

Singapore in the running

Texas is not the only site under review. TSMC has also held conversations with Singaporean officials, who are aggressively seeking semiconductor investments, according to multiple people familiar with the matter. These communications with Singapore have not been previously reported.

Singapore already hosts several chipmaking factories and the Asia-Pacific hubs for major AI developers such as Meta Platforms. The city-state has seen AI stoke growth and wants a growing role in the technology's value chain.

TSMC offered a direct response to the reports. "We have no comment on market rumors," the company said in a text message. The Singapore Economic Development Board declined to comment.

Home-grown R&D stays in Taiwan

For most of its history, Asia's most valuable company built its chip plants in Taiwan and benefited from that production concentration, partly because it simplified management and labour. Growing US national security concern, Covid, and then the AI boom gradually drove the broader global push.

Any expansion abroad is unlikely to change TSMC's longstanding policy of developing its most advanced chipmaking technology at home. Taiwanese officials have reiterated on several occasions that cutting-edge research and development will remain in Taiwan, and company executives have said that approach is the most efficient way to advance its technology.