Pinnacle West's Arizona Public Service asks regulators for a 25-year TSMC deal covering 1.9 gigawatts
TSMC's north Phoenix fabs would draw the electricity of roughly 300,000 Arizona homes under the first deal on APS's subscription model for power-hungry users. The terms go before a state commission that just changed hands, set the yardstick for every data center that follows, and commit TSMC, on the filing's terms, to pay for new generation whether or not the fabs reach full buildout.
Vincent Jiangfour-minute read
On November 6, 2026, Arizona Public Service (APS), Arizona's largest electric utility and the main subsidiary of Pinnacle West Capital+2.10% — Pinnacle West Capital, up 2.10 percent today (NYSE: PNW), asked the Arizona Corporation Commission to approve a 25-year Direct Pricing Contract with TSMC+2.40% — TSMC, up 2.40 percent today Arizona 12. The Direct Pricing Contract is a long-term agreement designed for customers with extra-large energy needs 2.
TSMC (NYSE: TSM), the world's largest contract chipmaker 3, would be the first customer on APS's subscription model for power-hungry users 1. The filing puts a number on its appetite: about 1.9 gigawatts at full buildout, the electricity use of roughly 300,000 homes 1.
The charge: growth that pays for itself
The claim on file is that TSMC's growth pays for itself. The filing states that TSMC Arizona will make long-term financial commitments tied to new generation resources and service infrastructure, so the cost of its expansion is not shifted onto the utility's other 1.5 million homes and businesses 2. To serve the load, APS is adding renewable resources and natural gas generation, including the proposed Desert Sun plant west of Gila Bend, and says TSMC's contracted rates would cover the cost of building it 1.
The evidence: the small bar in a very big queue
TSMC's own fabs are the small bar beside the campuses its chips are meant to fuel. In Cochise County, rocket company SpaceX−3.35% — SpaceX, down 3.35 percent today is behind a proposed 6-gigawatt supercomputing campus that would rank third nationally, behind developer Fermi America's 11-gigawatt Project Matador and investor Kevin O'Leary's 9-gigawatt Stratos project 56.
TSMC's 1.9-gigawatt fab load is dwarfed by the data-center campuses its chips fuel
TSMC's fabs are the small bar: its customers' campuses want 6 to 11 gigawatts
- Estimate
Data
| Value | |
|---|---|
| Project Matador (proposed) (estimate) | 11 GW |
| Stratos (proposed) (estimate) | 9 GW |
| Cochise campus (proposed) (estimate) | 6 GW |
| TSMC Arizona (contracted) | 1.9 GW |
The money moves at the same pace. TSMC's board approved about $40.9 billion of capital spending on November 10, and Goldman Sachs+1.63% — Goldman Sachs, up 1.63 percent today forecasts annual spending of $85 billion in 2027 and $98 billion in 2028 3. Capacity is so tight that Anthropic$350B — Anthropic, private, latest valuation $350B, an artificial intelligence lab, says in its IPO filing that TSMC's constraints have at times delayed scheduled chip deliveries 3.
TSMC's quarterly capital spending has more than doubled since early 2024
Capex hit a record $15.6B in Q2 2026, up 53% on the year
Data
| Quarterly capital expenditure | |
|---|---|
| Q3 '23 | $7.02B |
| Q4 '23 | $5.53B |
| Q1 '24 | $5.66B |
| Q2 '24 | $6.32B |
| Q3 '24 | $6.55B |
| Q4 '24 | $11.13B |
| Q1 '25 | $10.02B |
| Q2 '25 | $10.17B |
| Q3 '25 | $9.43B |
| Q4 '25 | $11.4B |
| Q1 '26 | $10.9B |
| Q2 '26 | $15.55B |
The exhibits: three claims with no numbers attached
APS's case leans on statements nothing yet quantifies: that TSMC's rates cover Desert Sun's cost, that the plant serves the grid beyond TSMC, and that capacity stays reserved for "existing homes, hospitals, schools, businesses, and communities" 2. The public description of the deal carries no rate level and no plant cost. The commission will vote on those words.
The prosecution: the court just changed hands
The counter-claim comes from the two winning candidates themselves: they accused the commission of being too deferential to the state's utilities 4. Voters then ended the five-member commission's all-Republican control on November 3, electing Democrats Clara Pratte, co-founder of renewable developer Navajo Power, and Jonathon Hill 4.
The commission is no rubber stamp: established under the state constitution, it must approve utility capital spending and long-term contracts, and its rulings carry the weight of law 7. The utility in front of it also plans to run the Four Corners coal plant as late as 2038 1.
The defense: the ramp is real and the money is moving
TSMC's side of the ledger is physical. Construction on its second Arizona fab finished in October, and volume production begins in the third quarter of 2027, "slightly ahead" of schedule, TSMC chief executive [C.C 8. Wei](https://theinference.org/markets/people) told investors on October 15 8. Nearly 20 facilities are under development worldwide, and Wei sent teams to inspect US data-center construction and grid capacity first-hand before committing more factory space 3.
The shape of the deal suggests why Pinnacle West wants it: a 25-year commitment on this scale is the demand a regulated utility is built to serve. The Inference has covered the water and rare-earth magnets the same campus depends on.
The verdict watch: who pays if the ramp slips
Nothing in the filing spells out who carries the risk, but the shape of a 25-year deal answers it: TSMC's commitments to the new generation run whether or not the fabs reach full buildout. If the ramp slips, it pays for the power anyway.
Two dated readings show how that lands. TSMC's 2027 guidance in January is where overseas capacity, and the power behind it, gets priced. In Arizona the docket is open, and the terms APS and TSMC file there are what every later large Arizona load, including the 6-gigawatt Cochise campus, will negotiate against.
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