TSMC's new chip factories in Phoenix, Arizona are unlikely to eliminate U.S. dependence on semiconductor technology from Taiwan anytime soon, according to industry experts. While the Biden administration has touted the $6.6 billion in funding awarded to TSMC for three new U.S. factories as a critical milestone, the company's most cutting-edge chips are expected to continue being produced primarily in Taiwan.

Analysts note that chips made in TSMC's U.S. facilities will likely be one to two generations behind the most advanced chips produced in Taiwan. For example, the first Phoenix factory is slated to produce 4 nanometer chips, while 3nm chips are already in production in Taiwan. Even as 3nm production eventually moves to the U.S., Taiwan is expected to be producing even more advanced nodes.

Experts cite several reasons for this continued reliance on Taiwan, including TSMC's R&D being concentrated there and the strategic importance of chip leadership to Taiwan's geopolitical position. The U.S. Commerce Department expects production of TSMC's most advanced chips to gradually transition to the U.S. over time, but the timeline remains uncertain.

While boosting domestic production, the new U.S. factories are not expected to fully close the technology gap with Taiwan in the near term. This dynamic preserves Taiwan's crucial role in the global semiconductor industry, potentially helping secure continued U.S. support in the face of tensions with China. However, it also means U.S. companies requiring the most cutting-edge chips will likely continue sourcing from Taiwan for years to come.

Ultimately, the Biden administration's goal appears focused on increasing domestic production capacity rather than completely eliminating reliance on foreign-made chips. The investment in U.S. facilities is still seen as an important step in strengthening supply chain resilience, even if some dependence on Taiwan persists.