Taiwan Semiconductor Plans Four New Fabs for AI Chip Production

Taiwan Semiconductor Manufacturing Co. (TSM) plans to start construction on four new fabs later this year, targeting mass production of 2-nanometer chips by late 2028. The new facilities will house four 1.4-nanometer wafer production lines, with a monthly output of 50,000 wafers. TSM aims to allocate 30% of its 2-nanometer and more advanced chip capacity to Arizona and plans to build 11 wafer fabs and four advanced packaging facilities globally over the next few years. TSM's shares surged to a record high, driven by a sharp rise in sales forecasts fueled by soaring demand for artificial intelligence chips.

Taiwan Semiconductor Manufacturing Co. (TSMC) is set to embark on a significant expansion, aiming to meet the surging demand for artificial intelligence (AI) chips. The company plans to commence construction on four new fabs later this year, targeting mass production of 2-nanometer chips by late 2028. These new facilities, designated Fab 25, will house four 1.4-nanometer wafer production lines, with a monthly output of 50,000 wafers [1].

TSMC’s expansion strategy is driven by the increasing demand for advanced AI chips. The company aims to allocate approximately 30% of its 2-nanometer and more advanced chip capacity to Arizona, as part of a broader $165 billion investment in the U.S. This investment includes six wafer fabs, two advanced packaging facilities, and a major R&D center [2]. Furthermore, TSMC plans to build 11 wafer fabs and four advanced packaging facilities globally over the next few years, underscoring its commitment to meeting growing customer demand [3].

The expansion comes amidst a record net profit for TSMC in the April-June quarter, with a net profit of NT$398.27 billion (approximately $12.82 billion USD), a 60.7% increase from the same period last year. The company expects to report record revenue of between $31.8 billion and $33 billion for the current quarter, although it remains cautious about the last quarter of 2025 due to uncertainties including potential tariff policies [2].

TSMC's stock has seen a remarkable surge, reaching a market value above $1 trillion in Taipei for the first time last week. The company’s shares have surged to a record high, marking a nearly 50% gain since April, making it the first Asian stock to top the $1 trillion mark since PetroChina briefly did so in 2007 [1]. This significant market performance reflects the strong positioning of TSMC amidst intensifying competition for AI chip production.

The company’s strategic expansion in the U.S. and Japan, coupled with its technological leadership, positions TSMC to maintain its dominance in the semiconductor industry. TSMC’s ability to balance growth with operational discipline, as evidenced by its robust free cash flow generation, is a critical differentiator in an increasingly competitive landscape [4].

References:
[1] https://www.benzinga.com/markets/tech/25/07/46514251/taiwan-semiconductor-plans-four-new-fabs-as-ai-gold-rush-continues
[2] https://www.iclarified.com/97905/apple-supplier-tsmc-fasttracks-arizona-chip-plants-to-meet-soaring-demand
[3] https://www.taipeitimes.com/News/front/archives/2025/07/20/2003840583
[4] https://www.ainvest.com/news/tsmc-2025-earnings-strategic-expansion-assessing-margin-resilience-global-manufacturing-keys-sustained-competitive-advantage-2507/