Taiwan Semiconductor Manufacturing Co. is preparing to expand capacity at its Arizona plant, according to people familiar with the matter, as the United States steps up restrictions on advanced semiconductor equipment sales to China. The move would deepen TSMC’s manufacturing footprint in the U.S. at a time when chip supply chains are being reshaped by trade and security policy.

The reported expansion comes as Washington seeks to limit China’s access to the most advanced tools used to make cutting-edge chips. Those controls have become a central part of the broader technology rivalry between the two countries, with semiconductor equipment now treated as a strategic asset rather than a purely commercial one.

TSMC, the world’s largest contract chipmaker, already has major investments underway in Arizona. Increasing output there could help the company serve U.S. customers more directly while reducing some exposure to geopolitical risk tied to operations in Asia.

The shift also highlights how export restrictions are influencing corporate planning across the semiconductor sector. Companies, governments, and investors are now adapting to a more fragmented global chip market, where manufacturing decisions are increasingly driven by national security concerns as much as by cost and efficiency.