Arizona is actually a good choice. It is geologically stable, doesn't suffer from natural disasters, is somewhat close to Silicon Valley, and has a large enough talent pool to staff TSMC's facilities.
Surprisingly, the area is also one of the largest Taiwanese communities in the U.S., which is a bonus for the engineers and their families who will be relocated from the "mothership".
Also, it's actually quite common for high-level Intel staff to fly back and forth from Portland and Phoenix. I am not sure if the same would be said about Taiwan and Arizona, but if they have staff in SV it wouldn't be too far-fetched.