WSJ TSMC Pursues Aggressive Domestic Growth Sets Up 3 More Factories at 2nm
While the Taiwanese company has been pumped tens of billions of dollars into facilities in the United States, TSMC has now doubled the investment for the domestic production capacity. According to reports from the semiconductor supply chain, it is said to be a current explosion in demand for artificial intelligence (AI) chips that has surpassed TSMC's advanced process capacity. Thus, the foundry giant plans to build three more 2-nanometer factories in Taiwan to fill in the gap.
Existing Demand Exceeds Planned Future Growth
TSMC had initially proposed seven 2nm fabs. The new construction is part of plans for Hsinchu and building even more in Kaohsiung, while the widening hunger for AI hardware now makes such a plan seem sorely short. To keep pace with orders coming in from other quarters, the company is reported to be considering adding three other factories.
Industry sources report that it may have cost each new construction unit somewhere around 300 billion yuan, adding up to a moon-shot 900 billion yuan up front for all three factories. TSMC assured that further specific information hinges on future official announcements, but supply chain insiders reveal that talks with government agencies are already under way. On top of that, it appears that the company is currently measuring much land, as advanced process market demand is still believed to be fuel.
Focusing on Expansion to Southern Taiwan
The National Science and Technology Council and Tainan City Government discussions indicate that this is probably the prize location for the Nanotechnology Industrial Park Land Acquisition Plan. The plan specifically indicates that the prime site for these semiconductor ventures is Block A, a prime 40-hectare area near the Southern Science Park.
If this progresses well through land acquisition and environmental impact assessments, then construction theoretically could start as early next year. This would tie in with TSMC's other ongoing in-country projects, such as the Taichung A14 factory area and the current 2nm developments in Hsinchu Bao Shan and Kaohsiung Nanzi.
Reason for Industry Dependence on TSMC
Samsung and Intel, two of TSMC's biggest competitors, want that AI pie—Tesla will soon enjoy Samsung's 2nm production, while Intel is selling his 18A process for the next generation of products—but the big international firms remain extremely reluctant to switch. The risk in yield rates and production stability makes leaving TSMC a risky business. This was made evident when Huang Renxun visited TSMC's Fab 18 in Southern Taiwan to secure more chips.
According to TSMC Chairman and CEO C.C. Wei (Wei Zhejia), the present supply crunch has been regularly worn out in much of his speech. During his delivery of the Robert N. Noyce Award, Wei mentioned that the demand from AI-driven customers has outstripped TSMC production in an almost threefold increase at the present time. Assessment of the situation was bluntly not enough, not enough, still not enough.
In the Perspective of Future Growth
For TSMC, the 2-nanometer family now stands as a very large and long-term process that will change its traditional course to a major extent in future operations. Thus, production of chips from the 2nm nodes has already started this quarter, with a very fast ramp-up expected next year in order to cater to an AI-hungry market.
