Semiconductors: TSMC receives approval to construct its third 2nm fab

News Analysis




Semiconductors: TSMC receives approval to construct its third 2nm fab

The proposed facility will occupy an area of 17.22 hectares in the Nanzih District industrial park, east of TSMC’s initial fab in Nanzih Technology Industrial Park.

Towards the end of 2023, after much speculation, the Kaohsiung government approved plans for constructing a fabrication facility in the Nanzih Industrial Park. The demand for high-end chips, particularly high-bandwidth memory chips, is expected to surge in the coming years due to their increasing use of AI algorithms and new premium smartphones. Major companies such as Nvidia, Apple, Qualcomm, and Broadcom have already booked TSMC's remaining high-end chip capacity until 2026.

To meet this rising demand, TSMC has undertaken the construction of multiple facilities worldwide or is securing approvals to select the best locations. TSMC already kicked off construction for fabrication plants in Arizona, and a third fab in the region was announced earlier this year following a US$6.6 billion funding boost under the Chips and Science Act. Additionally, construction is underway for its Baoshan 2nm fab in Hsinchu Science Park.

These developments highlight TSMC's strategy to leverage its position as one of the few producers capable of achieving 2nm nodes in chips. By diversifying its production locations globally, TSMC aims to mitigate the risk of geopolitical tensions disrupting its operations in the future.