Taiwan TSMC's Largest Foundry Investment This Year... Strengthening Industry Leadership

[Image source=Yonhap News]

[Asia Economy Reporter Dongwoo Lee] Taiwan's TSMC, the world's number one foundry company, is strengthening its global leadership by unveiling its largest-ever capital expenditure plan this year.

According to the semiconductor industry on the 17th, Taiwan's TSMC recently announced in its fourth-quarter earnings report that its capital expenditure for this year will reach $25 billion to $28 billion (approximately 27 trillion to 31 trillion KRW).

This surpasses not only the $17.2 billion spent last year but also the estimated capital expenditure forecast by experts for this year ($19 billion to $20 billion).

The industry believes that the reason TSMC is pouring such a large amount of funds into capital investment is due to a significant increase in orders from TSMC's fabless semiconductor design customers such as Apple, AMD, Nvidia, and Qualcomm for sub-5 nanometer (1 nm = one billionth of a meter) ultra-fine process technologies.

In fact, TSMC revealed that 80% of this year's capital expenditure will be used for ultra-fine advanced processes (3, 5, and 7 nanometers).

This involves expanding the purchase of extreme ultraviolet (EUV) equipment costing between 170 billion and 200 billion KRW per unit to perform sub-5 nanometer processes. This budget also includes the cost of establishing a 5-nanometer foundry plant in Arizona, USA, where TSMC plans to invest $12 billion by 2029.

The industry widely speculates that Intel's volume, which is currently considering outsourcing advanced processes, is included in TSMC's expanded investment plan for this year.

Intel recently revealed that it is deliberating between TSMC and Samsung Electronics as semiconductor foundry partners, and there is speculation that Intel chose TSMC, a specialized foundry company, over Samsung Electronics, which is also an integrated device manufacturer (IDM).

Major foreign media also expect Intel to expand outsourcing to TSMC starting with graphics processing units and moving on to next-generation flagship central processing units (CPUs).

Samsung Electronics, the world's second-largest foundry company, is also expected to increase its investment in system semiconductors this year to take a step closer to its goal of becoming the number one system semiconductor company by 2030.

Samsung Electronics projected in its third-quarter earnings report last year that its total capital expenditure for 2020 would be 35.2 trillion KRW, with 28.9 trillion KRW allocated to semiconductors.