Taiwan plans an industrial park in Texas costing up to $4 billion to bring smaller AI-hardware suppliers to the U.S.

Taiwan plans to build industrial parks in the United States for the smaller suppliers that TSMC and AI-server makers rely on, beginning with a Texas complex that could cost up to $4 billion, according to the island's economy minister and ministry.

A park for the smaller suppliers

Taiwan's Minister of Economic Affairs, Kung Ming-hsin, laid out the plan in an interview with Bloomberg News that was published on Friday in Taipei, Thursday evening in New York. He said the program would start with one complex in Texas that could cost as much as $4 billion to build, and that the government intends to open more than one site in the United States.

The parks are aimed at the small and midsize companies that sit beneath the island's biggest manufacturers. Kung said they would help suppliers that support Taiwan Semiconductor Manufacturing Co., Nvidia's main chipmaking partner, and AI-server assemblers such as Foxconn set up operations in the U.S. He said the government would back suppliers that move in by offering loan guarantees and by helping them deal with U.S. federal and local officials on matters such as visas and land.

Companies pay, the government helps

Later on Friday, the ministry said the parks would follow a model in which private businesses put up the money and the government provides assistance, with each park costing about $2 billion to $4 billion. It is carrying out the plan with the Taiwan Electrical and Electronic Manufacturers' Association, an industry group, which Kung said would raise the funds.

The idea has been building for months. In May, during a visit to Washington, the ministry said it had signed a memorandum of understanding with the association to draw on its experience choosing sites for, planning and managing industrial parks in the U.S. At the time, it said 20 Taiwanese companies, including chip-supply firms such as United Microelectronics and GlobalWafers and AI-server makers such as Hon Hai (Foxconn), Quanta and Wistron, had expressed interest in investing a combined $35 billion in the U.S., not counting TSMC's own spending. Hon Hai Chairman Young Liu has said recently that possible locations for overseas parks include Arizona and Texas, as well as Mexico, Poland and India.

The land question

Bloomberg's report also said, citing people familiar with the matter, that Taiwan has already secured land in Texas for the first park. The ministry did not confirm that. It said it would give details at a later date.

Where the trade deal fits

Industrial parks were part of the trade and investment agreement the U.S. and Taiwan signed on Jan. 15. A U.S. Commerce Department fact sheet on that deal said Taiwanese chip and technology companies would make new direct investments of at least $250 billion in the U.S., that Taiwan would provide credit guarantees of at least $250 billion to support further investment by its companies, and that the two sides would set up industrial parks in the U.S.

Asked about the plan, a State Department spokesperson told Taiwan's Central News Agency that the two sides have a long-standing, deep and growing trade and investment relationship that advances U.S. interests and helps create economic opportunity in the United States.

The plan surfaced a day after TSMC said it was looking past Arizona. On the company's Oct. 15 earnings call, Chief Executive C.C. Wei said TSMC had sent teams to Texas to evaluate adding capacity there and was talking with a customer building a fab, which he named as Terafab, about using that capacity. "So we're still in discussion," he said. TSMC raised its planned U.S. investment to $265 billion in July.