Arizona’s desert is now dwelling to among the world’s most superior semiconductor vegetation, hailed as proof that america has clawed again management over the applied sciences of the longer term. Politicians and pundits celebrated the arrival of the Taiwan Semiconductor Manufacturing Firm (TSMC) in Phoenix as a triumph of business coverage, an indication that Washington can nonetheless bend globalization to its will. Ribbon-cuttings and glowing headlines instructed a narrative of sovereignty regained.
But the newest conflict with Taipei suggests in any other case. Simply days in the past, U.S. Commerce Secretary Howard Lutnick demanded that Taiwan conform to a 50-50 cut up in chip manufacturing, with half relocated to america. Taiwan’s Vice Premier Cheng Li-chiun instantly pushed again, stressing that its negotiating crew “has by no means made any dedication to a 50-50 cut up on chips … nor would we conform to such situations.”
Arizona’s desert is now dwelling to among the world’s most superior semiconductor vegetation, hailed as proof that america has clawed again management over the applied sciences of the longer term. Politicians and pundits celebrated the arrival of the Taiwan Semiconductor Manufacturing Firm (TSMC) in Phoenix as a triumph of business coverage, an indication that Washington can nonetheless bend globalization to its will. Ribbon-cuttings and glowing headlines instructed a narrative of sovereignty regained.
But the newest conflict with Taipei suggests in any other case. Simply days in the past, U.S. Commerce Secretary Howard Lutnick demanded that Taiwan conform to a 50-50 cut up in chip manufacturing, with half relocated to america. Taiwan’s Vice Premier Cheng Li-chiun instantly pushed again, stressing that its negotiating crew “has by no means made any dedication to a 50-50 cut up on chips … nor would we conform to such situations.”
The dispute coincides with U.S.-Taiwan commerce negotiations revolving round a brand new reciprocal tariff regime. The US has levied a 20 p.c advert valorem obligation on many Taiwan items, however the White Home has exempted some semiconductors from these further tariffs. Taiwan, which in 2024 turned the seventh largest buying and selling companion of the U.S., is anxious that many different key sectors—together with information processing tools, electronics and equipment, comprising a lot of Taiwan’s U.S. export–—stay susceptible in talks which have been difficult by Washington’s 50-50 chip demand.
The episode underscores that, regardless of billions being poured into Arizona, Washington can’t dictate Taiwan’s industrial future. That actuality factors to the deeper paradox: the tech oasis taking form within the desert may be a mirage. Removed from signaling independence, TSMC’s $165 billion funding is greatest understood as a hedge, an insurance coverage coverage in opposition to disruption within the Taiwan Strait.
Since 2020, when TSMC launched its Phoenix undertaking to appease U.S. President Donald Trump, subsidies underneath former U.S. President Joe Biden’s CHIPS Act have fueled its enlargement. Now in his second time period, Trump has hardened the rhetoric. Lutnick brazenly hyperlinks Arizona’s semiconductor factories, generally known as fabs, to U.S. safety commitments, dismissing the “silicon protect” concept that Taiwan’s chip dominance deters Chinese language assault. His logic is blunt: If 95 p.c of the world’s superior chips are made in Taiwan, then these chips can’t defend Taiwan except a major share can also be produced in america.
What began as political theater has change into a showcase of whose deeper logic is much less about decoupling than about reconfiguring globalization. The extra that Arizona is held up as proof of independence—or at the least a pathway to it—the extra it reveals how tightly entangled america stays with Taiwan.
The Arizona complicated started as one modest fab and has grown into a number of services; by January 2025, the primary was producing four-nanometer chips, hailed as historic by then-U.S. Commerce Secretary Gina Raimondo. The symbolism was highly effective: For the primary time in a long time, main chips had been being made on U.S. soil.
But Taiwan stays TSMC’s crown jewel, with 10 fabs and 5 backend services there producing most of its chips, together with its most superior designs, with 11 extra deliberate. Arizona will ultimately host six fabs (it broke floor on the third in April)—necessary additions, however solely a fraction of TSMC’s international capability. The corporate has repeatedly emphasised that its middle of gravity stays in Taiwan, with U.S. services meant to enrich quite than change its dwelling base. The message is unmistakable: That is insurance coverage, not a switch of headquarters. And Taipei’s rejection of a 50-50 deal confirms that its leaders view retaining manufacturing dominance as important to their safety, not a bargaining chip to be traded away.
The insurance coverage logic is pragmatic. By diversifying manufacturing, TSMC reassures its American prospects—Apple, Nvidia, AMD—that not each wafer is tied to the Taiwan Strait. It additionally reassures Washington. The second Trump administration can level to Arizona as proof that industrial coverage delivers. The undertaking has introduced modest positive aspects: just a few Taiwanese suppliers which have arrange regionally, new coaching applications, and a few packaging capability. In a disaster, even partial home manufacturing presents extra resilience than america had earlier than, which was basically none.
However reassurance just isn’t the identical as sovereignty.
The declare that Arizona marks a clear break in provide chains falters when examined intently. Arizona’s fabs nonetheless rely on Taiwanese engineers, Hsinchu-led analysis and improvement, and Asian-sourced inputs—proof that Washington has outsourced its onshoring. And in Taipei, an opposition Kuomintang legislator warned that U.S. calls for threat “exploiting and plundering” Taiwan’s benefits and weakening the very protect that deters Beijing.
This isn’t self-sufficiency. It’s dependency in a brand new kind. Washington can’t declare real sovereignty when its premier manufacturing undertaking depends so closely on international know-how and provide chains. In the meantime, China is transferring quicker to domesticate autonomy. By blocking Nvidia’s AI chips, Beijing has compelled its home champions to innovate. Huawei’s Ascend clusters are starting to present options, even when they fall brief in effectivity. But with out entry to excessive ultraviolet lithography machines, China’s path to the leading edge stays blocked.
Nonetheless, the distinction is putting: Whereas Washington celebrates symbolic decoupling, Beijing is constructing partial self-reliance.
What Arizona actually reveals just isn’t the top of globalization however its reinvention. Contained in the fabs, tools is Dutch, chemical compounds are Japanese, subsidies are American, and engineers are Taiwanese. Even chips produced in Arizona are sometimes shipped overseas for packaging till U.S. services scale. The semiconductor stays essentially the most globalized product in existence, and the Arizona experiment demonstrates that borders can’t comprise it.
This sits uneasily with the sovereignty rhetoric. Billions in U.S. subsidies should not flowing to Intel however to TSMC, a international firm whose strategic selections will all the time mirror the realities of Taipei and Hsinchu. Washington is successfully underwriting the transplantation of a Taiwanese ecosystem, hoping it’s going to take root within the desert. That will sound like pragmatism—no American agency at the moment matches TSMC’s prowess—however it’s hardly sovereignty reclaimed. The most recent 50-50 standoff drives dwelling the purpose: The US can’t command sovereignty by fiat when the linchpin of its technique is unwilling to concede management.
The economics deepen the paradox. Arizona fabs price at the least 50 p.c greater than Taiwan’s, rely on subsidies, and nonetheless lean on imported expertise. Coaching applications are underway, however constructing an experience base to rival Taiwan’s will take years.
The provision chain stays fragile. Regardless of just a few Taiwanese chemical firms opening small vegetation in Arizona, most important supplies are nonetheless sourced from Asia. That tether leaves Arizona’s fabs susceptible to disruption or delay. With out a full provider ecosystem, the U.S. foothold will stay shallow, propped up by subsidies and political will.
The strategic dangers are sharper nonetheless. In a Taiwan Strait disaster, Washington would flip to Arizona as a security internet, however the internet may show too skinny with out scale. In that situation, China—compelled by sanctions to speed up home innovation—may muddle via with indigenous capability, whereas america would nonetheless be scrambling. And if, as has Lutnick argued, america’ means to defend Taiwan rests on having half the manufacturing at dwelling, then Taipei’s refusal leaves Washington with symbolism however not sovereignty.
TSMC’s Arizona undertaking is well known as proof that america is reclaiming sovereignty over the know-how that powers synthetic intelligence, superior weapons methods, and the digital economic system. The deeper story is much less flattering. Arizona is insurance coverage, not independence.
For all its fragility, the undertaking just isn’t meaningless. It has created political reassurance, modest industrial gravity, and the seed of an American semiconductor workforce. But these are fragments, not foundations. It doesn’t scale back dependency a lot as reconfigure it. Removed from decoupling, it underscores how tightly entangled america stays with Taiwan, whilst China edges nearer to partial autonomy. And the flare-up over a 50-50 cut up makes it clear that this entanglement is not only financial however political. Arizona could glitter within the desert solar, however with out Taiwanese consent, it dangers being remembered as an costly mirage.
