TSMC to top $100bn as it plans 11 fabs in Taiwan
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TSMC to build 11 fabs in Taiwan to meet demand for Ai chips as it ramps up production in Arizona and Japan. Demand for AI chips is driving a 30% increase in revenue this year to break through US$100bn.
The company is speeding up volume production of 4nm technology at its Arizona fab in the US later this year. 2nm production in Taiwan in already ramping at the same pace as 3nm and 5nm, driven by both smartphone chips for Apple and now AI chips for Nvidia.
“We concluded our second quarter with revenue of US$30.1bn, above our guidance in US dollar terms, mainly due to continued robust AI and HPC- related demand,” said CC Wei, CEO of TSMC. “Looking into second half of 2025, we have not seen any change in our customers’ behaviour so far. However, we understand there are uncertainties and risk from the potential impact of tariff policies, especially on consumer- related and price-sensitive end market segment. Having said that, we believe the demand for semiconductors is very fundamental and will continue to be robust,” he said.
11 fabs
“In Taiwan, with support from the Taiwan government, we plan to build 11 wafer manufacturing fab and four advanced packaging facilities over the next several years,” said Wei. “We are preparing for multiple phases of 2nm fab in both in both Hsinchu and Kaohsiung Science Parks to support the strong structural demand from our customers.”
3nm process technology contributed 24% of wafer revenue in the second quarter, while 5nm was 36% and 7nm was 14% for a total of 74%. HPC revenues increased 14% quarter-over-quarter to account for 60% of the second quarter revenue while smartphone increased 7% to account for 27%. IoT increased 14% to account for 5%, while automotive stayed flat and accounted for 5%, with 1% in consumer chips.
“Usually, we ramp up a new node using the smartphone. We knew that everybody knew it,” said Wei. “Now it’s not only smartphone, but also HPC product. However, the ramping profile I just reported is similar to 3-nanometer. It’s limited by our capability to build a new fab to ramp it up and also a little bit straightforward is constrained by the capacity. So we say the ramp profile is similar to N3, but the revenue contribution certainly will be bigger because you don’t expect our N2 is the same price as N3.”
“Recent developments are also positive to AI’s long-term demand outlook. The explosive growth in token volume demonstrate increasing AI model usage and adoption, which means more and more computation is needed, leading to more leading-edge silicon demand. We also see AI demand continuing to be strong. including the rising demand from sovereign AI. “Therefore, we now expect our full year 2025 revenue to increase by around 30% in US dollar terms, supported by strong demand for our 3nm and 5nm technologies underpinned by growth in our HPC platform.”
That would put the 2025 figures at US$114bn, up from US$88bn in 2024 which was also up 30% on the US$70bn in 2023.
“Amidst the uncertainties, we will remain mindful of the potential tariff- related impact and be prudent in our business planning going into second half 2025 and 2026 while continuing to invest for the future megatrends,” he said.
Capacity is very tight at N3 and N5 and will be for a couple of years, says Wei. “The demand is high because of a lot of AI products still in the 4nm technology node, and they will transition to 3nm probably in next two years,” he said.
This is driving the investment in capacity in Taiwan. “N2 will deliver full node performance and power benefit with 10 to 15 speed improvement at the same power or 20% to 30% power improvement at the same speed and more than 15% chip density increase as compared with N3E. N2 is well on track for volume production in the second half of 2025 as scheduled with a ramp profile similar to N3,” said Wei.
A performance up date in N2P is scheduled for second half 2026 at the same time as A16 with the Super Power Rail (SPR) technology for AI chips. Compared with N2P, A16 provides a further 8% to 10% speed improvement at the same power or 15% to 20% power improvement at the same speed and additional improvement of 7% to 10% in transistor density.
“We believe N2, N2P, A16 and its derivatives will fuel our N2 family to be another large and long-lasting node for TSMC,” said Wei.
A14 process
The second generation nanosheet transistors in the A14 process will be the next full node after N2 with 10 to 15 speed improvement at the same power or 20% to 30% power improvement at the same speed and about 20% chip density gain. “Our A14 technology development is on track and progressing well with device performance and yield improvement on or ahead of schedule. Volume production is scheduled for 2028,” said Wei.
In Arizona, TSMC has announced $165bn investment with backing from the US government.
“This expansion includes plans for 6 advanced wafer manufacturing fab in Arizona, 2 advanced packaging fabs and a major R&D centre to support the strong multiyear demand from our customers,” said CC Wei.
“Our first fab in Arizona has already successfully entered into high-volume production in 4Q 2024, utilizing N4 process technology with a yield comparable to our fab in Taiwan. The construction of our second fab, which will utilize 3nm process technology is already complete. We are seeing strong interest from our leading US customers [which include Apple and Broadcom] and are working on speeding up the volume production schedule by several quarters to support their need. Construction of our third fab, which will utilize 2nm and A16 process technologies has already begun, and we will look into speeding up the production schedule as well based on the strong AI- related demand from our customers.”
“Our fourth fab will utilize N2 and A16 process technology and our fifth and sixth fab will use even more advanced technology. The construction and ramp schedule for those fabs will be based on our customers’ needs. Our expansion plan will enable TSMC to scale up to a giga fab cluster in Arizona to support the needs of our leading-edge customers in smartphone, AI and HPC applications.”
“We also plan to build two new advanced packaging facilities and establish an R&D centre to complete the AI supply chain. After completion, around 30% of our 2nm and more advanced capacity will be located in Arizona, creating an independent leading- edge semiconductor manufacturing cluster in the US.
Dresden update
However Wei is less bullish about the ESMC joint venture fab in Dresden, Germany, for the automotive and industrial markets.
“In Europe, we have received strong commitment from the European Commission and the German federal, state and city government and are progressing smoothly with our plans to build a specialty technology fab in Dresden, Germany. The ramp schedule will also based on our customers’ need and market conditions,” he said.
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