TSMC's Factory Binge: Why They're Spending Billions and Building More Plants Than Ever
You're likely aware of TSMC, the goliath behind the globe's semiconductor manufacturing. With their influence in the industry growing by the day, so does the money they're putting into the company. This is big money we're talking about here – their capital expenditures for this year alone are expected to reach anywhere from $38 billion to $42 billion. Just for reference, that's a fivefold increase from what they spent all the way back in 2015.
This is not just about increasing existing facilities. TSMC is in the midst of a construction marathon. From building three factories a year between 2017 and 2020, they escalated to five each year between 2021 and 2024. And this year. They will top that by building a record-breaking nine new factories. Eight of them will be used for fabrication of wafers, the core of chip making, and one will be used for the critical step of packaging.
A Global Glance: TSMC's New Factory Hotspots
Where are all these new hubs of chip innovation popping up, then. Here's a quick rundown on what's happening with these nine large projects:
| Facility Name | Phase | Technology Focus | Location | Current Status (Approx.) |
|---|---|---|---|---|
| AP7 | 1 | Advanced Packaging | Chiayi, Taiwan | Construction was in progress as of September 2024. |
| Fab 20 | t 1 | A16, N2 (2nm class) | Hsinchu, Taiwan | Hardware installation underway, late 2025 production ramp-up targeted. |
| Fab 21 | t 2 | N3 (3nm class) | Personion, Arizona, USA | Installation of equipment underway. |
| Fab 21 | t 3 | A16, N2 | Personion, Arizona, USA | Construction reportedly started around April 2025. |
| Fab 22 | t 1 | A16, N2 | Kaohsiung, Taiwan | Hardware installation underway, late 2025 increase in production expected. |
| Fab 23 - JASM | t 2 | Sub-10nm technologies | Kumamoto, Japan | Construction was in progress as of January 2025. |
| Fab 24 - ESMC | t 1 | N12, N16, N22, N28 | Dresden, Germany | Construction started around August 2024. |
| Fab 25 | 1 | A14 (1.4nm class) or latest | Taichung, Taiwan | Due to be constructed in late 2025. |
The Next Generation Chip Technology
TSMC is not just growing, they're growing smartly. This year, toward the end of the year, they will boost chip production in their Fab 20 and Fab 22 facilities in Taiwan using their newest N2 (2-nanometer class) process. And it won't end there. Effective late 2026, the same factories will start manufacturing chips with newer N2P and A16 (1.6-nanometer class) technologies.
On the other side of the Pacific, their Arizona Fab 21 is no less busy. Phase 1 is already in progress, equipment for N3 production is being installed in Phase 2, and Phase 3, A16/N2-focused, began construction in April 2025. The same story is unfolding in Japan with Fab 23 Phase 2 and in Germany with Fab 24 Phase 1. Even further out on the horizon, Taiwan's Fab 25, due to come on line circa 2028, will probably lead the way in technology beyond A16/N2 – perhaps where we'll see A14 (1.4nm class) and more advanced chips come into being.
Why Such a Huge Investment.
TSMC in 2025 is building or setting up around eight or nine brand-new manufacturing plants simultaneously – the company's flat-out record. Such a huge undertaking contributes to the projected spending of $38 to $42 billion, up significantly from $29.2 billion in 2024 and the last high of $35.2 billion in 2022.
But it's not just a question of raw numbers of factories. Two big drivers are powering these astronomical expenditures:
Blowout Demand: Demand for advanced chips is immense, especially with the AI phenomenon. AI chips are physically larger than many of their legacy counterparts, so more wafers must be processed to meet demand. TSMC's existing customers are in waiting line for more.
The Rising Cost of Cutting Edge: Building these next-gen factories is not inexpensive. TSMC's advanced EUV (Extreme Ultraviolet) lithography machines and other advanced manufacturing techniques used in them are not cheap. For instance, every ASML Low-NA EUV system costs around $235 million, and TSMC buys more and more of them every year.
It's clear that TSMC is betting big on the future, shelling out big bucks in order to remain at the forefront and meet the burgeoning global need for the tiny powerhouses propelling our digital cosmos.
