Taiwan Semiconductor Manufacturing Company (TSMC) is facing slight delays in the expansion of its Japan base due to traffic congestion, even as its parallel US project advances rapidly, Bloomberg reported.

TSMC CEO C.C. Wei reaffirmed the company’s commitment to invest an additional $100bn in Arizona over the next five years, despite earlier concerns expressed to former US President Donald Trump about the difficulty of completing such a massive buildout.

The expansion efforts in Japan and the US reflect TSMC’s strategy to diversify production internationally amidst growing geopolitical tensions and increasing demand for Nvidia chips, which are crucial for AI development.

TSMC has traditionally operated from Taiwan but has been expanding its footprint, including a new plant in Japan backed by Tokyo’s commitments and incentives. The company also boosted its US investment shortly after Trump’s inauguration.

Wei shared his personal experience with the worsening traffic in Japan, stating, “We have created too big an impact on the local traffic. I have experienced that in person.” He indicated that construction would be postponed until the situation improves, with the Japanese government promising swift action. However, the duration of the delay, which Wei described as minor, was not specified.

TSMC is central to the global technology supply chain, manufacturing advanced chips for products like Apple’s iPhones and Nvidia’s AI servers. The company’s plans are closely watched by governments worldwide, especially after semiconductor shortages during the pandemic highlighted the industry’s importance.

TSMC’s second factory in Kumamoto Prefecture is crucial to Japan’s semiconductor ambitions, but the influx of workers from TSMC’s first plant has strained local infrastructure.

While Japanese municipalities can access subsidies for infrastructure improvements, property rights issues can significantly delay such projects. Wei expressed concern about the negative impact on local residents, urging the government to prioritize traffic improvements.

Despite these challenges, TSMC remains optimistic about AI chip demand, with executives expecting mid-20% revenue growth by 2025. However, they also cautioned that the strong Taiwanese dollar could pressure margins, although record profits are anticipated for the year.

Amidst these developments, TSMC is also considering an advanced production facility in the UnitedArab Emirates. However, Wei clarified that there are no current plans for a chip fab in the region due to a lack of local customers.