Taiwan Semiconductor Manufacturing Co (TSMC) signage displayed at the Hq in Hsinchu

TSMC Chairman Mark Liu didn't reaffirm a previous forecast that the company will grow slightly in 2019, saying uncertainty was too great at the moment

The Trump administration hit hard against the Chinese Communist Party (CCP) late this week with the announcement that a Taiwan chip manufacturer will be building a plant in the United States and that the move will severely restrict the company’s ability to sell to China’s Huawei.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC) announced that it will build a new factory in Arizona as part of a $12 billion deal with the U.S. that will “create over 1,600 high-tech professional jobs directly, and thousands of indirect jobs in the semiconductor ecosystem,” the company said in a statement.

“TSMC welcomes continued strong partnership with the U.S. administration and the State of Arizona on this project,” the company added. “The strong investment climate in the United States, and its talented workforce make this and future investments in the U.S. attractive to TSMC. U.S. adoption of forward-looking investment policies to enable a globally competitive environment for a leading edge semiconductor technology operation in the U.S. will be crucial to the success of this project.”

A U.S. Commerce Department official said TSMC’s decision to locate the plant in the United States generated “good will” at the department, the drafter of a law that would, if implemented, severely restrict TSMC chip sales to Huawei.

Credit Suisse analysts said proposed restrictions could threaten TSMC’s 14% of sales from Huawei, escalate U.S.-China tensions and delay the rollout of the next-generation 5G mobile network.

The plant is “the biggest foreign investment by TSMC,” Reuters notes, and “will produce the most sophisticated 5 nanometer chips, which can be used in high-end defence and communications devices.”

Secretary of State Mike Pompeo responded to the news on Twitter, writing: “The U.S. welcomes TSMC’s intention to invest $12B in the most advanced 5-nanometer semiconductor fabrication foundry in the world. This deal bolsters U.S. national security at a time when China is trying to dominate cutting-edge tech and control critical industries.”

Pompeo said that the chip will be used for a wide range of functions, including in 5G base stations and F-35 fighter jets, Reuters notes.

U.S. Secretary of Commerce Wilbur Ross praised the deal, saying, “TSMC’s plan to build a $12 billion semiconductor facility in Arizona is yet another indication that President Trump’s policy agenda has led to a renaissance in American manufacturing and made the United States the most attractive place in the world to invest.”

“This plan is the result of years of close collaboration among TSMC, the Governor of Arizona and his staff, and the Administration, particularly our Assistant Secretary of Commerce Ian Steff,” Ross added. “This announcement is the product of strong cooperation between federal, state, and local governments, leveraging the unprecedented investment climate for manufacturers created by President Trump. Our global team of Commerce professionals stand ready to work with additional semiconductor companies looking to expand their operations and investments in the United States.”