Nvidia (NVDA) shares slipped about 2% on Friday as news emerged that Taiwan plans to build a series of industrial parks in the United States to house suppliers for the AI chipmaker's supply chain. TSMC (TSM), Nvidia's primary manufacturing partner, also declined roughly 2%.

Bloomberg reported the plan, citing an October 12 interview with Taiwan's Economy Minister Kung Ming-hsin. According to the minister, Taiwan intends to establish several industrial parks across the U.S. to support companies producing AI hardware, with each complex potentially requiring up to $4 billion in investment. The first site is slated for Texas, and Kung estimated its cost at between $2 billion and $4 billion. The plan would extend a shift already underway, in which Taiwan's manufacturers are localizing more of the AI hardware chain on U.S. soil — from TSMC's chip fabrication to Foxconn's server assembly.

How Taiwan Plans to Fund the Parks

Taiwan is partnering with the Taiwan Electrical and Electronic Manufacturers' Association, which will raise the capital needed for the projects. The government will also provide loan guarantees and plans to help suppliers navigate local and federal regulations and permitting processes. Timelines, tenant rosters, and final funding totals for the Texas site have yet to be disclosed — official confirmation and site selection will be the next details to watch.

The initiative comes as Taiwan faces pressure to fulfill investment commitments under its trade deal with Washington, while also seeking to reduce geopolitical risks tied to tensions with China.

TSMC has pledged $265 billion for U.S. expansion, and Foxconn and Wistron are likewise adding American production capacity to meet strong AI demand. While TSMC and Foxconn have the financial strength to fund and manage their own U.S. growth, smaller suppliers may lack that option — a gap the proposed parks are designed to fill.

Nvidia CEO Jensen Huang highlighted these smaller firms during a speech in Taipei earlier this year, naming dozens of parts makers and calling them important to the global AI supply chain. TSMC fabricates the chips, while Foxconn assembles products and builds AI servers. Their combined output supports Nvidia and AMD, along with cloud firms such as Meta and Microsoft.

Nvidia's Supply Chain Pressures

The announcement lands as Nvidia contends with shortages of key components and rising memory costs. Demand for high-bandwidth memory remains elevated, which limits chip deliveries and pushes prices higher. In June, TrendForce reported that Nvidia's planned supply of low-power DRAM for its Vera Rubin platform may cover only about 60% of its needs — a report that added to worries about tight parts supply.

Nvidia has raised its supply commitments to lock in access to critical components. Those commitments jumped from $119 billion in the first quarter to $279 billion in the second quarter, which ended July 26. Commitments of that scale typically cover agreements to buy components and reserve production capacity — a mechanism that carries added weight when supply is tight.

According to TipRanks, Wall Street maintains a Strong Buy consensus on NVDA, with the average price target pointing to 49% upside.