TSMC's global expansion: Eyes Arizona as global semiconductor hub; planning to establish a global gigafab cluster
Taiwan Semiconductor Manufacturing Co. (TSMC) is advancing its strategy to meet increasing global demand for advanced semiconductors used in smartphones, artificial intelligence (AI), and high-performance computing (HPC).
At an investor conference on Thursday, TSMC chairman CC Wei highlighted Arizona's growing strategic importance within the company's global operations. He said the state is set to become a critical hub for TSMC's most advanced manufacturing technologies.
The company's first Arizona fab began mass production in the fourth quarter of 2024, using 4-nanometre process technology. Wei further stated that the facility's yield rate is already on par with TSMC's similar fabs in Taiwan.
Construction of the second Arizona fab, which will produce 3nm chips, the most advanced node currently deployed in Taiwan, has been completed. Due to strong customer demand, production is now scheduled to commence several quarters ahead of the original timeline.
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Meanwhile, groundwork has begun for a third fab in the state, which will use 2nm and A16 process technologies. Wei confirmed that demand for AI-related chips remains particularly robust.
TSMC's total investment across the three Arizona fabs stands at $65 billion. The company has also pledged an additional $100 billion over the next few years to deepen its US presence. This includes plans for three more fabs, two integrated circuit (IC) assembly plants, and a dedicated research and development centre.
These projects are expected to transform Arizona into a self-sustaining semiconductor manufacturing hub, with the state's facilities eventually accounting for roughly 30% of TSMC's most advanced chip production, those using 2nm and newer technologies.
TSMC's global expansion plans extend beyond the US. In Japan, its first fab in Kumamoto began mass production in late 2024, producing chips using 12nm, 16nm, and 28nm processes.
A second fab, originally scheduled to break ground in early 2025 and begin operations in late 2027, will manufacture 6nm, 7nm, and 40nm chips.
However, Wei noted a slight delay in the project due to traffic infrastructure issues. Construction is now expected to start later this year, depending on local progress.
In Germany, TSMC is also progressing smoothly with the construction of a fabrication facility in Dresden, which will focus on specialty semiconductor technologies.
Back in Taiwan, the company continues its major domestic expansion. It plans to build 11 new wafer fabs and four advanced IC assembly facilities over the coming years. Current projects in Hsinchu and Kaohsiung are scheduled to begin mass production using 2nm process technology later this year.
Despite the ambitious overseas expansion, TSMC's chief financial officer Wendell Huang cautioned that the company will face short-term financial pressures. He projected a 2–3 percentage point dip in gross margins initially, with a broader 3–4 percentage point decline expected over the next five years due to the higher operating costs associated with international sites.
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