"Yield Already Approaching 60%, Twice That of Samsung Electronics"… A Look Inside TSMC's Hard-Working '2nm Sanctuary' [Report]

[Silicon Shield, Into the Heart①]
Visiting TSMC's Hsinchu Plant, Outpacing Samsung Electronics
Half of Four Lines Completed... Six Months of Pilot Operation
Key Equipment Installation, Including EUV, Begins This Month
Designed as a Plant for Intel... Potential Impact from Management Challenges

Editor's NoteTSMC of Taiwan, which has quietly grown in the semiconductor market, is reorganizing its 'silicon shield' lineup in response to tariff pressures from U.S. President Donald Trump. Recently, it announced a surprise $100 billion (about 145.9 trillion KRW) investment in the U.S., simultaneously countering the Trump-led tariff bomb and focusing on its production bases in Taiwan to enhance its deterrence against China. In particular, it is accelerating the establishment of ultra-fine semiconductor process facilities to quickly respond to market demand. Once solely focused on unnamed industries for survival, TSMC is now actively defending its position as the world's No. 1 foundry (semiconductor contract manufacturing). Asia Economy analyzes TSMC's strategies, risk factors, and opportunities for Korea in four installments through on-site reporting in Taiwan and expert interviews amid the global trade war.

At a construction site in Baoshan within the Hsinchu Science Park, about 60 km from Taipei, the capital of Taiwan. After an hour's ride from Taipei Station to Hsinchu Station, enormous steam was billowing from the chimneys of the massive complex. Even in the early dawn, workers were lined up moving toward the office building construction site beyond a temporary outer wall about 2.5 meters high. Behind it, a tall outer wall encircled the production factory. This is Fab 20, where TSMC, the overwhelming No. 1 in the global foundry market, is pilot-producing 2nm (1nm = one-billionth of a meter) semiconductors.

A view of TSMC Fab 20 in the Hsinchu Science Park located in Baoshan, Hsinchu County, Taiwan. Construction of the front office building of the factory, which consists of four 2-nanometer (nm; 1 nm = one billionth of a meter) process lines, is in full swing. Two lines (P1, P2) have already been completed and have been test-producing 2 nm semiconductors for six months, while equipment delivery and installation will take place this month at the P3 line under construction beyond the outer wall. Photo by Kim Hyunjung

According to sources in the Taiwanese semiconductor industry on the 5th, among the four production lines in TSMC's Fab 20 located in Baoshan, Hsinchu, two lines (P1 and P2) have already been completed. These lines have been producing 2nm semiconductors for six months, with yields reportedly approaching 60%. The industry consensus is that the full-scale mass production timeline will be moved up from the original year-end target. Compared to Samsung Electronics, which holds the global second-largest foundry market share and whose 2nm yield remains at about 20-30%, TSMC is widening the gap.

When visiting the site on the 21st of last month, internal construction was underway for the remaining P3 and P4 lines beyond the outer wall. According to sources, the installation of key equipment, including the Netherlands-based ASML's cutting-edge extreme ultraviolet (EUV) lithography machine, the High-NA EUV, is scheduled to begin this month on the P3 line.

Fab 20 Built for Intel... The 2nm Sanctuary

Baoshan Fab 20 is considered the largest among TSMC's existing 2nm production plants. The area of Fab 20, which is set to start mass production within the year, is about 550,000 square meters, comparable to the size of a typical industrial complex in Korea.

Despite a magnitude 6.4 earthquake that occurred on January 21, the factory's completion speed is evaluated as satisfactory. The damage was concentrated in the Southern Taiwan Science Park, where 3nm and 5nm process factories are located. Fab 20 reportedly only paused operations briefly and suffered no significant damage. Inside the completed office building confirmed on-site that day, electrical work was finished, and fluorescent lights were brightly lit. Industry sources hinted, "Electrical work, including the office building, is largely completed, with remaining construction focused on the lobby, connecting roads, and parking lots as auxiliary infrastructure."

Factory yield is reportedly exceeding expectations. Local media such as Taiwan Liberty Times cited TSMC officials stating that the company's 2nm process yield has surpassed 60%, and production capacity will be expanded beyond initial targets. Including production from the Kaohsiung Fab 22, scheduled for completion by year-end, the company plans to increase the target monthly production volume from 50,000 wafers to 80,000 wafers by year-end, according to company representatives.

Traffic Congestion Everywhere... Hsinchu Science Park is 'Expanding'

Established by the Taiwanese government in the late 1980s, Hsinchu Science Park is the cradle and heart of TSMC. Although it is the smallest among the local science parks (1,467 square meters), it overwhelmingly hosts the largest number of semiconductor companies (200 companies as of the end of January with valid permits). Not only TSMC, founded in 1987, but also UMC, VIS (Vanguard), MediaTek, Realtek (fabless), and Novatek (design) have their headquarters here. The Central Taiwan Science Park (14.85 million square meters) and Southern Taiwan Science Park (21.49 million square meters) are densely populated with precision machinery (88 companies) and biotech (82 companies), respectively, but semiconductor companies number only 18 in the central and 41 in the southern parks. Even combined, these two parks do not reach one-third of Hsinchu's semiconductor company count.

On the 20th, expansion work is underway on a road and bridge located in the Hsinchu Science Park in Baoshan, Hsinchu City, Taiwan. Within a 5 km radius of this road, numerous TSMC headquarters and factories are densely concentrated. As a result, the area around the park experiences severe traffic congestion during commuting hours due to the heavy flow of people.
(Photo by Kim Hyunjung)

The semiconductor sector's performance is also prominent in sales proportions. Of the total sales of 1.2523 trillion Taiwan dollars (about 55.5145 trillion KRW) generated in Hsinchu Science Park from January to October last year, the semiconductor sector alone earned 892 billion Taiwan dollars (71.2%). This is a stark contrast compared to other sectors such as computers and peripherals (149.6 billion dollars) and optoelectronics (101.4 billion dollars). The semiconductor sales ratio is also high in the Central and Southern Taiwan Science Parks, at 81.5% (692.8 billion Taiwan dollars) and 84.1% (1.4402 trillion Taiwan dollars), respectively.

The urban density of Hsinchu County is steadily increasing due to new factory establishments and expansions of existing facilities by companies in Hsinchu Science Park. Traffic congestion during commuting hours is so severe that even locals advise, "If you have a schedule, time is tight, so you need to move faster than planned within the park." During last month's visit, infrastructure projects such as road widening to add lanes were underway in various locations due to surging demand. Local resident Mr. Chen explained, "The resident population keeps increasing, and with more vehicles on the move, infrastructure expansion projects like roads and traffic lights are ongoing. Recently, as the number of external visitors has grown, many companies have arranged separate shuttles departing from train stations."