The US semiconductor supply chain has yet to achieve full self-sufficiency, as recent reports reveal that chips produced at TSMC’s Arizona facility are being sent back to Taiwan for packaging. This process is critical to meeting the massive demand coming from AI markets. 
Despite Arizona’s state-of-the-art manufacturing capabilities, the packaging services required for companies like NVIDIA are unavailable locally, forcing TSMC to fly out its completed wafers to Taiwan for the necessary finishing touches.
Packaging is essential for making chips usable by AI server manufacturers, and the lack of suitable facilities in Arizona has led to logistical challenges. Taiwan’s Eva Air has been a key beneficiary of this development, seeing a significant rise in air logistics demand as a result. This situation highlights the ongoing limitations of the US semiconductor ecosystem, even with TSMC’s ambitious $165 billion investment plan for US production.
Despite the added cost of flying wafers across the Pacific, TSMC and its partners have deemed the process acceptable, especially with the booming AI market. The US chip supply chain is, however, on track to meet over 50% of domestic demand by 2032. President Trump’s chip policies have played a role in shaping this trajectory, though the continuation of US semiconductor development is largely fueled by ongoing efforts from the Biden administration. TSMC plans to scale up its production, including the future production of 1.6nm chips (A16), signaling a brighter outlook for domestic semiconductor manufacturing.