TSMC to Invest Up to 50 Trillion KRW in Facilities Next Year to Meet 2nm Demand

12.5% to 14.3% Investment Increase Compared to This Year
Second Highest Ever Following 2022 ($36.3 Billion)

Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturer), is expected to expand its capital expenditure to as much as 50 trillion won next year, according to Taiwan media including United Daily News on the 1st.

A source said that TSMC has started introducing production facilities for process upgrades in response to the expansion of research and development (R&D) of cutting-edge processes such as 2㎚ (1㎚ = one billionth of a meter) semiconductors and increased demand. The unit ㎚ represents the semiconductor circuit line width, and the smaller the preceding number, the lower the power consumption and the faster the processing speed. Currently, the world's most advanced mass production technology is 3㎚.

[Image source=Reuters Yonhap News]

The source said that TSMC plans to expand related production facilities in the Southern Taiwan Science Park, and the capital expenditure for next year is expected to increase by 12.5 to 14.3% from this year's $28 billion to $32 billion (about 38.6 trillion to 44.1 trillion won) to $32 billion to $36 billion (about 44.1 trillion to 49.6 trillion won). It was added that the scale of capital expenditure in 2025 will be the second largest ever, following 2022 (about $36.3 billion).

Another source said that TSMC plans to place at least eight 2㎚ factories across Taiwan, including the Baoshan area of the Northern Hsinchu Science Park and the Nanzi Science Park in southern Kaohsiung. Among them, the 2㎚ factory in the Southern Taiwan Science Park is expected to start mass production between the end of 2025 and 2026. TSMC has declined to comment on the report. However, regarding capital expenditure and progress related to 2㎚, it emphasized that it will respond cautiously based on long-term market demand, as stated in the earnings briefing last April.

Meanwhile, fueled by increased demand for artificial intelligence (AI) semiconductors, TSMC recorded a net profit of $7 billion (about 9.59 trillion won) in the first quarter of this year, up 9% from the same period last year. This exceeded market expectations (about 9.1336 trillion won). Revenue also rose 13% year-on-year to $18.87 billion (about 25 trillion won), surpassing the previous forecast range ($18 billion to $18.8 billion). Sales for the second quarter are expected to reach $19.6 billion to $20.4 billion, a 30% increase from the same period last year.