Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), one of the world’s top contract chipmakers, is planning to build a $12 billion plant in Arizona.

The facility will employ more than 1,600 and produce state-of-the-art five nanometer chips that can be used in advanced defense and communications devices, Reuters reported Friday.

Construction will begin in 2021, with production scheduled to commence in 2024, Reuters said.

The Wall Street Journal, which first reported the details of the project on Thursday, said that it remains unclear whether TSMC would receive financial incentives from the Trump administration, which has repeatedly called to shift foreign manufacturing to the U.S.

A U.S. Commerce Department official said TSMC’s decision to make chips on U.S. soil has generated “good will,” according to the Reuters report.

TSMC’s move comes after senior U.S. government officials agreed to a proposal that would require foreign companies such as TSMC that use American-designed chipmaking equipment to obtain a U.S. license before selling chips to blacklisted Chinese tech giant Huawei. Washington has labeled Huawei a national security threat, a charge the company denies.

The chip plant plan may help TSMC convince the Trump administration to scrap the proposal, which the Taiwan chipmaker believes would take a toll on its revenues.

TSMC makes chips on contract for many global tech companies including Qualcomm, Nvidia, Apple and Huawei, with the bulk of its products manufactured in Taiwan. It also has older chip facilities in China and the state of Washington.

Contact reporter Ding Yi (yiding@caixin.com)

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