Photo Credit: TSMC Arizona
There has been much ado about President Trump’s tariff announcement a few weeks back. Putting it charitably, it has been…rocky…but lost in all of the partisan bickering is the reality that there is now an incentive to onshore business operations. Whether or not it’s worth it is a subject for an economics blog, but the reality is that some multinational corporations will be looking to expand or set up operations in the United States now.
Enter easily one of the biggest potential prizes in this potential onshoring: Nvidia. The multi-trillion dollar corporation that makes the absolute best in a certain type of processor, one that is the standard for artificial intelligence.
In what is yet another win for the state of Arizona, Nvidia recently announced that they plan to invest up to $500 billion into the states of Arizona and Texas to develop domestic production capabilities. They intend to build their highest-end chips in conjunction with TSMC in its production plant in the city of Phoenix.
This move is an obvious reaction to President Trump’s tariff announcement. The chaotic unveiling, pausing, and then sector-based tariffs have provided a headache for many Chief Operating Officers who then have to plan out years and billions of dollars in an environment where the President can retract those tariffs at the speed of a social media post. The semiconductor industry is a specific point of uncertainty at the time of writing, as Trump has been teasing specific tariffs for that industry.
It is worth noting that nothing has been done at the time of writing, and words are easy. After all, in the first Trump administration, Apple told President Trump that they would create three manufacturing plants in the United States, something which never came to fruition. Words are easy, while rearranging global supply chains and setting up hyper-technical and complicated processes is much harder. Besides, Nvidia very clearly stated “up to $500 billion”, which allows them plenty of room to wiggle. So while a positive development, it must be taken with a grain of salt.
That said, they’re choosing Arizona, as are so many other large corporations. The lesson is clear: the high tax, high regulation states are losing new jobs to the states that are business-friendly with a good economic climate. Regardless of how much money is actually invested here, it’s a great indicator of what has been built in this state.