On July 1, according to the Taiwanese media “Economic Daily,” recent industry rumors suggest that TSMC, due to continuous investment in 2nm and other advanced process R&D and capacity expansion, is expected to increase its capital expenditure by 12.5% to 14.3% year-on-year in 2025, reaching $32 billion to $36 billion, the second-highest level in its history.
The rumors indicate that the demand from TSMC’s 2nm customer base is stronger than expected, with plans to expand capacity also involving the introduction of the Southern Taiwan Science Park to make room for process upgrades. Besides Apple, which previously secured the first batch of TSMC’s 2nm capacity, other clients are also actively planning to adopt it due to the booming development of AI.
In this regard, TSMC’s 2nm capacity construction is estimated to further expand, with the potential for four phases in Hsinchu Baoshan, two phases in Kaohsiung, and if the Southern Taiwan Science Park plans materialize, it could help TSMC’s 2nm family achieve at least eight phases and eight plants’ capacity.
TSMC continues to advance its goal of 2nm mass production in 2025. The first 2nm plant in Baoshan is expected to have equipment installed in April 2024, with the second Baoshan plant maintaining its schedule. The Kaohsiung plant plans to expand 2nm production, with related equipment anticipated to be installed by the third quarter of 2025. If the Southern Taiwan Science Park joins in producing 2nm, it will start mass production expansion from the end of 2025 to 2026.
In this context, TSMC is likely to further increase its capital expenditure in 2025. Market rumors indicate that semiconductor equipment giants like ASML and Applied Materials will be the winners of TSMC’s increased capital expenditure, with related suppliers also expected to grow simultaneously.
TSMC stated it would not comment on market rumors and reiterated that its capital expenditure and 2nm progress are based on the content of the April earnings call this year.
At the April earnings call, TSMC emphasized that capital expenditure and capacity planning are based on long-term structural market demand. The 2024 capital expenditure is expected to range between $28 billion and $32 billion. The 2nm process is scheduled to enter mass production in 2025, with a production ramp-up curve expected to be similar to that of 3nm.
TSMC Chairman Mark Liu responded to media inquiries after this year’s shareholders’ meeting, stating that TSMC had achieved its three-year $100 billion investment plan last year. The rise of artificial intelligence (AI) has made TSMC’s future promising, with cautious assessment of capital expenditure and capacity planning, closely tied to market demand. Whether it will exceed previous plans remains to be seen by investors.
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