EU industry commissioner Thierry Breton, who has championed the Eurofab idea, spoke with TSMC's Europe president, Maria Marced, last month.
Breton publicly called the TSMC talk a "good exchange", a second person familiar with the matter said the TSMC talks in Europe have gone "very poorly".
A TSMC spokeswoman said that the company has not ruled out any possibilities but had no plans for a plant in Europe.
European chip and auto companies, for their part, are mostly lined up against the idea. They would prefer subsidies for the older generation chips that are heavily used by car manufacturers and are in short supply.
Many of TSMC's most lucrative customers are US-based, while its European customer base comprises mostly In the first quarter. Clients based in Europe and the Middle East only accounted for six percent of TSMC's revenue, far outpaced by the 67 percent of sales from North America and 17 percent from Asia Pacific.
Sources said TSMC has not ruled out building an older-generation chip plant in Europe to serve auto customers.
Reuters this month reported that the previously disclosed factory could be the first of up to up to six planned plants at the site. Now, company officials are debating whether the next plant should be a more advanced facility that can make chips with so-called 3-nanometer chipmaking technology compared to the slower, less-efficient 5-nanometer technology used for the first factory.
The more advanced 3-nanometer plant could cost $23 billion to $25 billion, one person familiar with the matter told Reuters. Details of TSMC's plans for the additional factories at the Arizona site have not been previously reported.
Officials have also sketched out plans for TSMC to make next-generation 2-nanometer and more minor chips as the Phoenix campus is built out the next 10 to 15 years, the person said.
TSMC is likely to compete against Intel and Samsung for subsides from the US government in building the plants. President Joe Biden has called for $50 billion in funding to support domestic chip manufacturing, and the US Senate could take action on that as early as this week.
Some government officials worry that subsidies for TSMC could help Taiwan, where the company would continue to conduct research and development more than the US, But the US subsidy plan does not exclude foreign firms.
A debate over how to boost chipmaking is playing out in the European Union. Intel has shown serious interest in those efforts, with chief executive Pat Gelsinger pitching a subsidy that could amount to $9 billion for a proposed "Eurofab" during a trip to Brussels last month.
