18,000 Reasons It’s So Hard to Build a Chip Factory in America

 

“The transformation of Phoenix into a semiconductor hub by Taiwan’s TSMC illustrates the difficulties of large-scale projects in the United States.

 

The computer chip factories rising from an empty expanse of the Sonoran Desert test the concept of immensity. The complex is under construction across 1,149 acres, an area larger than New York’s Central Park. It represents an investment of $165 billion, making it one of the most expensive undertakings on earth.

 

Here on the northern edges of Phoenix stands a display of the American reach for industrial self-sufficiency. The factories are engineered to make advanced computer chips — the brains of modern manufacturing. Those chips will power data centers that deliver artificial intelligence.

 

American political leaders celebrate the presence of the plants as insurance against geopolitical turmoil and disasters like pandemics. Whatever happens, the nation will have its own supply of computer chips.

 

But the company at the center of this enterprise — one cast as vital to national security — is not American. Taiwan Semiconductor Manufacturing Company, or TSMC, the global leader in the industry, has marshaled the investment, the people and the know-how to turn these plans into reality.

 

Scores of other companies, some of them American but many from East Asia, have set up their own local factories to supply TSMC with everything it needs, from chemicals and components to construction and engineering services. Collectively, they have invested an additional $40 billion in the local economy.

 

This is the inescapable truth behind the transformation of Phoenix into a hub for computer chips: It could never have happened without the expertise and money brought in from across the Pacific. The last major domestic chip plant came online in 2013. So the United States lacks the experience to build one without considerable help.

 

And even with that assistance, the experience has been tumultuous, fraught with missteps and enormously expensive. The process that has turned a blank spot on the map into what some now call the Silicon Desert underscores a defining feature of American life: A tangle of bureaucracy often hinders ambitious visions, sowing confusion, uncertainty and delay. That tends to reinforce inertia and discourage development.

 

West of Phoenix, in a community near the TSMC complex, Kathy Bartelheim and her neighbors had no interest in becoming participants in a national crusade to make computer chips.

 

Ms. Bartelheim, 65, lives on a reddish-brown landscape dotted by cactuses and wildflowers. She bought her home a decade ago. “It was about the peace, the serenity, the solitude,” she said. “There’s a magical feeling here.”

 

Last year, she learned that Amkor Technology was planning to construct a so-called advanced semiconductor packaging plant nearby. It would assemble chips made by TSMC. She and other residents were horrified. They envisioned tractor-trailers bearing toxic chemicals and a massive draw on scarce local water. They mobilized in opposition.

 

They won. Amkor moved to another site.

 

The face-off between concerned homeowners and a factory with implications for national resilience is emblematic of broader forces constraining American aspirations. Here is part of the explanation for delays at computer chip clusters from New York to Ohio to Texas. Here is why companies around the globe are reluctant to make things in the United States, fearing a bewildering array of regulations and trouble finding workers.

 

At home in Taiwan, TSMC is used to moving aggressively, gaining whatever resources, personnel and government approvals are required to propel its astonishing expansion. Yet in Phoenix, TSMC and its suppliers have wrestled with the intricacies of a different system.

 

They have been tripped up by a confusing process to gain permits. They have struggled to find workers with needed skills. They have contended with higher costs of doing business, succeeding through force of will and vast sums of money.

 

Under pressure to build factories in the United States, TSMC has already completed one so-called fab — a plant now producing chips — while continuing construction of two more. It has outlined plans for three more factories at the Phoenix site, plus a pair of advanced packaging facilities. When these plans are completed, the company expects to make nearly one-third of its advanced chips in the United States.

 

“We knew it was going to be really hard,” said Rose Castanares, president of TSMC Arizona, during a recent interview. “We’ve learned from that.”

 

The challenge speaks to the complexities of exporting a successful model from the opposite side of the Pacific to the United States. It also attests to dimensions of American governance.

 

President Trump has vowed to spur a revival in American manufacturing as a centerpiece of his economic plans. He has leaned heavily on tariffs as the way to force companies to set up factories in the United States and hire American workers. He has effectively bet that the allure of making goods inside the world’s largest consumer marketplace would be enough to overcome other challenges.

 

But the simplicity of that prescription confronts the reality that the United States lacks workers with needed skills.

 

Three years ago, as TSMC prepared to set up in Phoenix, its founder, Morris Chang, noted that the costs of making chips at a smaller factory in Oregon were 50 percent higher than in Taiwan. He envisioned a similar situation in Arizona.

 

“It will be a very expensive exercise in futility,” Mr. Chang said in an interview with the Brookings Institution, adding, “It will be noncompetitive in the world market.”

 

In Taiwan, TSMC and its suppliers build facilities in dedicated industrial zones that generally require one permit from a central authority. In Arizona, they must negotiate municipal, county, state and federal regulations, requiring thousands of approvals.

 

“Every step requires a permit, and after the permit is approved, it takes at least twice as long as in Taiwan,” TSMC’s chief executive and chairman, C.C. Wei, said this year at National Taiwan University.

 

The company was required to gain permits from city and county authorities to comply with state and federal regulations. In many instances, regulations for its industry did not exist at the local level, so TSMC had to convene a team of experts to craft its own language and gain approvals.

 

“We ended up establishing 18,000 rules, which cost us $35 million,” Mr. Wei said.

 

Such laments stem from an extraordinary American success. Over decades, the United States has used regulation to reduce air and water pollution, while enhancing workplace safety. Yet bureaucracies have grown around those rules, often in incoherent fashion.

 

“Some of the main issues that hold back U.S. manufacturing have very little to do with substantive environmental standards,” said Thomas Hochman, director of infrastructure policy at the Foundation for American Innovation, a Silicon Valley-aligned research organization.

 

He cited the National Environmental Policy Act, which directs federal agencies to consider and evaluate the impacts of projects but does not compel action. “It does not say, ‘You cannot pollute X,’” Mr. Hochman said. “It does not say, ‘You cannot discharge Y.’ It says, ‘You need to do paperwork.’”

 

Environmentalists challenge that depiction, arguing that paperwork requirements play a vital role in forcing agencies to put on record how developments affect the natural sphere. The law also requires the authorities to consider less harmful alternatives.

 

Some argue that the challenges in Phoenix attest more to the special treatment of the semiconductor industry in East Asia than shortcomings in the United States.

 

In Taiwan, economic growth is dominated by chip making, so the government is “focused on making everything streamlined,” said Chris Miller, an economic historian at Tufts University and author of the best-selling book “Chip War.” “It wouldn’t be rational for us to change everything to suit the chip industry.”

 

The Path to Phoenix

 

The presence of TSMC in Phoenix reflects a reassessment of geopolitical risks. No one at its headquarters in Taiwan stared at the globe and concluded that Phoenix was the most suitable place to make chips. Rather, the company responded to its customers.

 

TSMC does not design chips. It makes them for businesses like Apple and Nvidia, the company at the center of explosive growth in artificial intelligence.

 

In recent years, TSMC’s customers have grown worried about its dependence on factories in Taiwan, a self-governing island claimed by China. What if Beijing unleashes its military to seize control, disrupting the supply of chips? With such fears in mind, TSMC has begun constructing factories around the world, including in Germany and Japan.

 

One of TSMC’s largest customers urged the company to set up an advanced manufacturing plant in the United States.

 

“They asked us before the pandemic,” Ms. Castanares said. “We just do what our customers ask us to do.”

 

The Biden administration was intent on diminishing American reliance on faraway factories. It sought to attract computer chip manufacturers by earmarking more than $52 billion in subsidies via the CHIPS and Science Act. The funding included $6.6 billion for TSMC.

 

The Arizona Commerce Authority, an economic development agency, courted the company, highlighting the state’s legacy as a center of semiconductor production. Motorola began making computer chips in the area in the mid-1950s. Intel opened a fab in Chandler in 1980.

 

Arizona State University promoted its industry expertise and aggressive expansion plans. Over the last 15 years, the ranks of its engineering students have grown to 33,000, from 6,000.

 

“We’re saying: Certain things we must manufacture here, no matter what,” said Michael Crow, the university’s president. “We haven’t thought like that, except during times of war.”

 

But nothing gets built in Phoenix without reckoning with water. Shortages have prompted state and local authorities to limit development.

 

Chip plants require enormous amounts of water. The first three TSMC factories were expected to need a collective 16.4 million gallons per day — about as much as consumed by 200,000 homes. TSMC says its expect to draw little of that from municipal supplies. The company is building a wastewater treatment plant that it says will eventually recycle nearly all of its water.

 

The area offered huge undeveloped tracts and a conducive climate. Summer temperatures exceed 110, yet the weather is predictable and largely free of disasters like floods and tornadoes.

 

By the spring of 2024, TSMC had committed to build three factories in Phoenix, while investing $65 billion.

 

Then President Trump returned to office, gaining the company’s commitment to more than double its plans. He cast TSMC as the centerpiece of his campaign to elevate American manufacturing.

 

Not Enough People

 

Making computer chips is an industrial magic trick. Billions of microscopic transistors are crammed onto slivers of silicon using a process something like the creation of a photographic negative. Machinery casts beams of light so slender that a human hair may be five thousand times as thick.

 

But installing that equipment, and getting it to work properly, requires people with specialized training and experience. Two years ago, TSMC acknowledged that it was having trouble finding local people who knew how to do it. The company brought in more than 500 experienced workers from Taiwan.

 

Local unions accused TSMC of breaching the spirit and rules of its federal subsidies. They urged immigration authorities to block visas for the Taiwanese workers.

 

The company resolved the conflict by committing to show preference to American workers. But labor disputes have continued.

 

A lawsuit brought by 28 former and current TSMC employees at facilities in Arizona and California accuses the company of relying on Taiwanese senior managers who sideline American workers by conducting business in Chinese while denigrating local hires.

 

The lawsuit depicts dangerous conditions inside the fabs. It asserts that TSMC reflexively brings in workers from Taiwan rather than investing in training local people.

 

“They’re under the impression that American workers are lazy, incompetent and stupid,” said David Amiri, 34, one of the plaintiffs, who spent two years at TSMC as a fire protection engineer. “It was easier for them to just do it, rather than teach someone to do it.”

 

TSMC declined to discuss the lawsuit. In a statement, the company said it “is committed to providing a safe, welcoming and inclusive environment for our employees.”

 

The local company president, Ms. Castanares, acknowledged tension between the impulse to move faster and taking the time to develop a local work force. “We’re trying to find that balance,” she said.

 

Most of the 3,000 employees at the fab were hired in the United States, the company said.

 

Local consultants, lawyers and real estate agents who work for the company say TSMC’s managers are under pressure to meet deadlines set at headquarters in Taiwan. Hiring people who lack Chinese fluency and familiarity with the company’s ways invites miscommunication.

 

Local construction companies are unacquainted with specialized techniques developed in Taiwan, including a process to lay out and join pipes.

 

“There’s been a massive learning curve for contractors in the U.S.,” said Hassan Khan, a director of economic security in the CHIPS Program Office during the Biden administration. “TSMC had a finely tuned ecosystem in Taiwan. They had protocols. When they came here, that ecosystem didn’t exist.”

 

In Taiwan, TSMC operates in what many describe as paternalistic fashion, extending job security and training to its workers in exchange for selfless dedication. Employees are expected to drop family activities when needed at the plant. American workers operate with a more codified sense of rights.

 

“It’s two different worlds,” said Mindy Wu, president of W Consulting & Company, which works with incoming TSMC suppliers. American workers expect to go home at a promised hour or receive overtime. “With Taiwanese companies,” she said, “the boss expects you to stay and finish the job.”

 

Flora, Fauna and Fire Extinguishers

 

TSMC and its suppliers were surprised by the challenges of development in the American Southwest.

 

“They came in so fast, they didn’t really know the rules of the game,” said Jere W. Planck, the founder and managing partner of Archicon, a Phoenix architectural firm that has worked with TSMC suppliers. “They didn’t know what they didn’t know.”

 

Arizona authorities required that the company survey its site to ensure that it was free of desert tortoises. The City of Phoenix demanded that TSMC identify and replant protected species of desert flora.

 

Last year, the Environmental Protection Agency notified Maricopa County, which includes Phoenix, that it intended to reclassify the local ozone threat as serious. That would have made it far harder for TSMC to gain Clean Air Act approvals. Under President Trump, the agency loosened its standards.

 

When Mr. Amiri joined TSMC in June 2022, he assumed the company would value his knowledge of applicable safety codes. He had spent three-plus years as a Phoenix fire inspector.

 

The company had to expand the sprinkler system, he told his supervisors. Some of the structures had spaces where the roof jutted out beyond the outer wall, and sprinklers had to be installed overhead. This was a substantive issue of safety, he said.

 

But the Taiwanese manager he approached about this dismissed his concerns, Mr. Amiri said.

 

“They wanted to copy in the U.S. exactly how they do it in Taiwan,” he said. “They didn’t change a single bit of their design.”

 

An inspector for TSMC’s insurance company later noted the defect and demanded that it be remedied, Mr. Amiri said, and the cost ran “six figures.”

 

In June 2024, he quit in frustration.

 

Linde, a company that pumps pristine air into TSMC fabs, erected a plant next door to the factories, including a $45 million pipeline. Linde needed 150 permits for the pipeline alone, Mr. Planck said. A permit was required to pile extra dirt left from grading the site. Each permit entailed as many as 15 inspections.

 

The company had to gain permission from the Federal Aviation Administration for a tower.

 

The city insisted that Linde get a letter from a nearby shooting range promising that ammunition would not be fired in the direction of its plant.

 

Chip Demand vs. Community Concerns

 

Amkor, the chip packaging company, was more than just another supplier. It was a missing piece to the whole puzzle. Advanced packaging takes freshly manufactured chips and fits them together for use in devices like consumer electronics.

 

“They are one of the big anchors,” said Michael Rosas, a vice president at the Arizona Commerce Authority.

 

In late 2023, Amkor announced plans to build a $2 billion plant in Peoria, a city just west of the TSMC complex.

 

“We need to be close to the manufacturers,” Amkor’s chief operating officer, Kevin Engel, said in an interview.

 

The project gained a $400 million federal grant via the CHIPS act. The company has yet to receive the money, which is based on achieving milestones, but expressed confidence that it would.

 

The Peoria City Council approved a development agreement with Amkor in February 2024. The plant was to be built in the middle of 320 acres slated for housing, restaurants and office space.

 

Residents cried foul. How was a factory compatible with the surroundings? City officials offered assurances. The tallest building would be no higher than 54 feet, they said.

 

Yet by January, the planned factory had doubled in height, while expanding across more than four times the initial square footage.

 

Amkor was under pressure to add capacity to accommodate TSMC’s growing demand for A.I. chips, Mr. Engel said. Its investment had swelled to $7 billion.

 

Residents of the Vistancia community jammed Peoria City Council meetings, demanding a halt to the factory and threatening legal action. Publicly, the city held firm.

 

Jason Beck, the Peoria mayor, had made the Amkor plant a major economic-development goal. Behind the scenes, he pursued a deal by which the city bought a larger, more remote parcel via a state land auction. The company recently broke ground at the new site.

 

“Sometimes, things get ugly,” Mr. Beck said.

 

‘This Is Only the Beginning’

 

A few miles to the east, at the TSMC site, glass-fronted offices glistened in the sun as towering cranes moved supplies across the pale soil. Earth movers tore at the land, sending clouds of dust skyward.

 

Across a freshly paved street, the Mack Real Estate Group, the company behind Manhattan’s Time Warner Center, was developing an entire city, Halo Vista, across 2,300 acres. Its first phase, expected to break ground early next year, will center on a hotel, big-box retailers, car dealerships, restaurants and gyms.

 

Subsequent waves over the next two decades are to include industrial zones, offices and 9,000 housing units. The development is premised on the idea that TSMC’s suppliers will continue to follow the company to Phoenix.

 

Inside TSMC’s complex on a recent afternoon, a stage had been assembled in the center of an atrium for a ceremony to mark production of advanced A.I. chips for one of its most important customers — the Silicon Valley behemoth Nvidia.

 

Jensen Huang, Nvidia’s founder, entered the building, sending a palpable jolt through the facility. Employees gasped and cheered. Many pressed against the balconies to catch a glimpse of the man behind the demand for what they were building. They held up their phones for photos.

 

“This is a very big day for America,” Mr. Huang said from a lectern. “This is only the beginning.”

 

He gazed up at the workers assembled at the balconies. He noted the fact that many had come from far away.

 

“None of this would have been possible,” he said, “if not for so many Taiwanese families that made your journeys to the United States.”” [1]

 

1. 18,000 Reasons It’s So Hard to Build a Chip Factory in America. Goodman, Peter S; Elliott, Loren.  New York Times (Online) New York Times Company. Dec 4, 2025.