TSMC Flies Chips from Arizona to Taiwan for Packaging, Highlighting U.S. Dependence on Taiwan’s Semiconductor Supply Chain
Despite significant U.S. investment in domestic semiconductor manufacturing, Taiwan Semiconductor Manufacturing Company (TSMC) is reportedly transporting chips fabricated in its Arizona plant back to Taiwan for advanced packaging services, underlining the persistent dependence of the American chip supply chain on Taiwan’s mature semiconductor ecosystem. The revelation, first reported by the Taiwan Economic Daily, underscores logistical and infrastructural gaps in the U.S. semiconductor sector as it races to meet booming AI-related demand.
Lack of U.S. Packaging Capabilities Forces Costly Airlift Back to Taiwan
According to the report, TSMC’s Arizona facility is unable to fulfill packaging demands from key clients such as NVIDIA, Apple, AMD, and Qualcomm—especially for AI server-grade chips. This shortage in domestic packaging capability has led TSMC to fly fully-processed wafers from Arizona back to Taiwan, where they undergo advanced packaging processes such as CoWoS (Chip-on-Wafer-on-Substrate) before being sent to customers.
Eva Air, a major Taiwanese airline, has reportedly seen a dramatic surge in air cargo demand, much of it linked to these semiconductor shipments. This uptick aligns with renewed momentum in AI server orders following the recent suspension of U.S. tariffs that initially slowed demand in April. However, even with expanded manufacturing on U.S. soil, Taiwan remains the hub for critical backend services.
$165 Billion U.S. Investment Still Faces Bottlenecks
TSMC previously announced a monumental $165 billion investment in U.S. semiconductor development, which includes plans for multiple fabs and advanced packaging facilities. While this investment signals a long-term strategic shift, tangible progress on establishing domestic packaging infrastructure—especially for high-end technologies like CoWoS—has yet to materialize.
The urgency is further amplified by the AI boom. As NVIDIA’s dominance continues and hyperscalers scramble to secure server hardware, the ability to deliver complete, ready-to-integrate chips becomes a bottleneck. The ongoing reliance on Taiwanese services is tolerated due to the overwhelming demand and the premium prices AI chips command, softening concerns over increased airfreight costs.
U.S. Supply Chain Progress Still Underway, With 2032 as Target
Despite these setbacks, the trajectory of U.S. chip self-sufficiency remains positive. The current roadmap aims to meet over 50% of U.S. domestic chip demand by 2032, supported by ongoing policy incentives and industrial investment. TSMC is also reportedly preparing to produce 1.6nm (A16) chips on American soil in the coming years, showcasing long-term commitment to U.S.-based advanced node manufacturing.
President Trump’s chip policy initiatives and the CHIPS Act have clearly accelerated domestic efforts, but the missing packaging link exposes a critical vulnerability. Until comprehensive backend facilities come online, Taiwan will remain the keystone in the global semiconductor assembly process, even as the U.S. ramps up fab construction and workforce development.
What are your thoughts on the U.S. still flying chips back to Taiwan for packaging? Is this a temporary fix or a sign of deeper issues in the domestic semiconductor strategy? Share your thoughts below.
