Taiwan Semiconductor Manufacturing Co. Chief Executive Officer C. C. Wei blamed worsening traffic snarls for delays in expanding its base in southwestern Japan, even while a parallel U.S. effort races ahead.
Wei reaffirmed a commitment to spend another $100 billion ramping up manufacturing in Arizona over the next half-decade. He stressed productive discussions with Donald Trump earlier this year, even after telling the U.S. president it will be “very, very difficult” to complete such a big buildout in five years because of a shortage of skilled labor. Trump was “warm” during their exchange, Wei said.
The twin projects embody TSMC’s impetus to produce abroad as geopolitical tensions rise and demand grows for Nvidia Corp. chips essential for developing AI. TSMC has long operated mostly from its home turf of Taiwan but built a plant in Japan after securing a raft of commitments and incentives from Tokyo. It then announced plans to dramatically increase its U.S. investment days after Trump took office.
“We have created too big an impact on the local traffic. I have experienced that in person. For what used to take a 10-15 min drive, it now takes almost an hour,” the CEO told reporters after hosting a shareholders’ meeting in Hsinchu, Taiwan, on Tuesday. “We told the Japanese government we’ll delay the construction until the traffic improves. They said they’ll make improvements as soon as possible.”
But Wei did not specify the length of the delay, which he characterized as minor.
The world’s largest contract chipmaker sits at the heart of the global technology supply chain, producing cutting-edge chips for Apple Inc.’s iPhones and Nvidia’s AI servers. Governments from Washington to Brussels have for years courted the company, particularly after shortages of certain types of semiconductors during the pandemic halted production of cars, smartphones, power tools, home appliances and other electronics.
TSMC’s plan to build a second factory in Kumamoto Prefecture—with construction widely expected to have started in the first quarter of this year—is key to Japan’s ambitions to regain leadership in semiconductors and attract engineers to an aging country.
But the sudden influx of workers from TSMC’s first plant is already bogging down rural infrastructure, even as the chipmaker’s plans in the U.S. lowers the urgency of production in Japan. The holdup recalled earlier hitches in getting production up and running at Arizona’s newest U.S. facilities—though TSMC has made significant headway since.
Japanese municipalities are able to tap central government subsidies to improve roads and other infrastructure to better attract foreign factories, according to a government panel. But in a country where many people feel a strong connection to ancestral land, obtaining the property rights to widen roads can take years if not decades.
“This will become negative for the area, for the local government, but I am most worried it will become negative for local residents,” Wei said. “So we told the Japanese government to improve the traffic first.”
There also remain questions about the longer-term outlook for AI demand. Even before Washington slapped additional tariffs on much of the world—only to roll them back shortly after—investors had questioned whether big tech firms from Microsoft Corp. to Meta Platforms Inc. will continue to buy Nvidia chips and build data centers at the same pace.
Executives on Tuesday said demand for AI chips still outstripped supply. Wei reaffirmed the chipmaker was still looking for 2025 revenue growth in the mid-20% range, an outlook it delivered during quarterly earnings calls in April. But the executive also warned that the strengthening Taiwanese dollar was pressuring its margins, even though the company expects record profit this year.
TSMC executives have stressed that demand—particularly for high-end chips critical to developing artificial intelligence—has remained resilient. That’s helped reassure investors fearful of the Trump administration’s escalating campaign to curtail China’s tech ambitions and impose sky-high tariffs on goods around the world. For 2025, the market remains nervous about the fallout for the global economy and a sector that supplies critical components to just about every industry on the planet.
Taiwan’s largest company is also evaluating building an advanced production facility in the United Arab Emirates, Bloomberg News reported. The project—discussed with the Trump administration—is a substantial investment in what’s called a gigafab, a complex of six factories similar to what TSMC is building in Arizona. On Tuesday, Wei said TSMC didn’t harbor plans to build a chip fab in the region because there’s no customer there.
This story was originally featured on Fortune.com
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