TAIPEI--A Taiwanese maker of processor chips for Apple Inc. and other customers plans to invest $3.5 billion to set up a U.S. subsidiary amid American concern about relying too heavily on sources in Asia for high-tech components.

Taiwan Semiconductor Manufacturing Co., the world’s biggest contract producer of semiconductors, said its board approved the plan Tuesday to set up the subsidiary in Arizona. It gave no details of what functions it will perform.

U.S. officials worry their country relies too too heavily on factories in Taiwan, South Korea and China for semiconductor chips used in smartphones, medical equipment and other products. Those anxieties increased after the coronavirus pandemic disrupted global shipping.

The Wall Street Journal reported in May that TSMC was talking with Apple, one of its biggest customers, about the possibility of building a U.S. factory.

TSMC said then it was looking at possible locations for its first factory outside Taiwan and had talked to the U.S. Commerce Department but had no concrete plans.

Last year, the U.S. Government Accountability Office said in a report that relying on foreign producers reduced costs but “can also make it harder" for the military to get components if governments cut off access.

TSMC is among components suppliers whose business has been disrupted by U.S. sanctions imposed on Chinese companies in a feud with Beijing over technology and security.

Washington has barred TSMC and other global vendors from using U.S. technology to make chips for Huawei Technologies Ltd., one of the Taiwanese company’s biggest customers. That blocks most manufacturing, including of chips designed by Huawei, because their production lines need U.S. technology and components.