Taiwan to Fund $4 Billion Texas Complex for AI, Nvidia Partners

Taiwan plans to raise billions of dollars to develop industrial parks in the US that would build a base for a comprehensive supply chain for Nvidia Corp. and other AI hardware makers in the country.

The initiative is starting with a complex in Texas that would cost as much as $4 billion to build, according to Taiwan’s Minister of Economic Affairs Kung Ming-hsin. The facilities would help smaller suppliers that are essential to the operations of Nvidia’s main production partner Taiwan Semiconductor Manufacturing Co. and AI server assemblers including Foxconn Technology Group to set up shop in the US, Kung said.

Each complex would run between $2 billion and $4 billion to build, and the government is planning “more than one” site on US soil, Kung said in an Oct. 12 interview with Bloomberg News. The Taiwanese government is partnering with the Taiwan Electrical and Electronic Manufacturers’ Association, which will be responsible for raising required funding to develop the complexes, he said.

“We are going to establish a long-term, sustainable supply chain there that can also be joined by American firms and local workers, and not just Taiwanese companies,” Kung said.

Companies like TSMC, Foxconn and Wistron Corp. provide essential hardware for data centers and are critical to the success of US AI chipmakers including Nvidia and Advanced Micro Devices Inc., and cloud service providers such as Meta Platforms Inc. and Microsoft Corp. These Taiwanese manufacturing titans depend in turn on lesser-known partners that make a wide range of parts from chip packaging substrates to cooling modules — everything that’s required in an AI data center.

But while TSMC and Foxconn are capable of funding and managing their own US expansion, that’s not always the case for smaller firms. That’s how Taiwan is hoping the new industrial complexes in the US could help.

Many of these suppliers got a boost from Nvidia Chief Executive Officer Jensen Huang when he cited the names of a few dozen parts makers during a keynote presentation in Taipei earlier this year, a gesture that signaled how indispensable the firms are to the global AI ecosystem.

Taiwanese officials will back suppliers that seek to operate in these parks, including by offering loan guarantees and helping communicate with local and federal officials in the US on needs ranging from visas to land, Kung said. Earlier this year, Taiwan pledged to help support $250 billion in credit guarantees for further investment in the American semiconductor supply chain as part of its trade deal with the US.

Taiwan has already secured a plot of land for an industrial park in Texas, according to a person familiar with the matter. In response, the Ministry of Economic Affairs said it will elaborate on the plan at a suitable time.

Developing a robust supply-chain on US soil has taken on new urgency for Taiwan, which is under pressure to deliver on its investment commitments under the trade deal forged with the Trump administration earlier this year. The self-governing island is also seeking to mitigate the geopolitical risks to its biggest tech manufacturers from long-standing tensions with China.

TSMC alone has pledged to spend $265 billion to build advanced chipmaking plants in Arizona, the largest-ever foreign investment in America. Meanwhile, Nvidia’s major server assembly partners including Foxconn and Wistron have been expanding their US production capacity to capture growth opportunities from the domestic AI infrastructure buildout.

AI demand is so massive that it’s offering a great opportunity for manufacturers to reshore production to the US, the minister said. Lucrative margins from such business can help cover the high costs initially incurred when building factories in the US, he added, and costs will gradually fall as companies scale up their operations.

At the same time, Taiwanese suppliers are under huge time pressure to fulfill AI orders and are ramping up production both at home and overseas, Kung added. He said that while TSMC is making a major commitment in the US, it’s going to build “many, many more” plants at home. The Taiwanese government isn’t worried about TSMC’s global expansion, which is a move to turn its customers into strategic partners, Kung said.

Read: TSMC Open to Working With Terafab But Must Control Plants

Texas has become a popular destination for Taiwanese companies after both Foxconn and Wistron recently expanded their presence there.

TSMC said on Thursday it’s also exploring Texas as a new site in the US, although when asked whether the company has decided on the Lone Star state, Kung said the chipmaker is looking at “many locations” for additional investments without elaborating. TSMC declined to comment.

Kung quipped that Tesla Inc. CEO Elon Musk, who has vowed to take on TSMC in chipmaking, is welcome to use the new supply chain created by Taiwanese companies in the US, “though we will not completely transfer our technology to him.”