TSMC Arizona Chips Are Reportedly Being Flown Back to Taiwan For Packaging; U.S. Semiconductor Supply Chain Still Remains Dependent on Taiwan

The US chip supply chain hasn’t entirely achieved self-reliance, as according to a new report, chips made by TSMC Arizona are being sent back to Taiwan for packaging to fulfill massive demand coming from the AI markets.

TSMC Doesn’t Have Sufficient Packaging Services in The US, Which Is Why It is Flying Wafers to Taiwan

Well, air cargo services will be in high demand, particularly in North America, as TSMC is having difficulty getting optimal packaging services domestically. In a report by the Taiwan Economic Daily, it is claimed that due to high demand for chips, TSMC US is flying out fully-prepared wafers to Taiwan, to get packaging services and then make those chips usable by AI server manufacturers. The report claims that Arizona doesn’t have packaging services required by the likes of NVIDIA, so flying out is the only option available, which is fast and apparently more convenient than setting up packaging facilities in the US for now.

One of the primary beneficiaries of this process is Taiwan’s Eva Air, which claims that the demand for air logistics services has seen a massive rise recently, especially after all the hype towards TSMC’s US facilities. When President Trump’s tariffs initially hit the markets back in April, the momentum for AI server orders did see a decline; however, since the tariff pause, companies have been pouring in orders in large amount, and given the backlog in TSMC’s Taiwan facilities, the firm has no other option than shifting its orders to Arizona.

However, the American chip supply chain isn’t sufficient, and some shortcomings are yet to be addressed. In the $165 billion investment announced by TSMC for the US, there were plans to create advanced packaging facilities responsible for CoWoS and its derivatives. but it seems like there’s no progress for now. While flying out chip wafers to Taiwan does add to the extra cost, it looks like neither TSMC nor its partners are bothered by this move, since the AI supply chain is currently witnessing phenomenal demand, with most of the orders going towards NVIDIA’s AI servers.

However, the US chip supply chain is definitely heading in the right direction. It is slated to address more than 50% of its domestic demand by 2032, showing that President Trump’s “chip policies” are working. TSMC has plans to scale up production further to 1.6nm (A16) in America, so it is safe to say that the future is optimistic.