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TSMC's advanced process: accelerating to the US, 10 factories under construction at the same time.

The U.S. Department of Commerce recently approved a $6.6 billion subsidy for TSMC Arizona to set up three wafer fabs, and the subsidy will be paid based on the completion status. Among them, TSMC Arizona Fab 3 plans to use advanced processes in addition to 2 nanometers, and the A16 nanosheet process is prominently listed.

TSMC Arizona's total investment scale is expected to be $65 billion (about NT$2.11 trillion). The first 4-nanometer wafer fab will start production in the first half of 2025, and the second 2-nanometer process wafer fab will adopt the next generation of nanosheet transistor structure technology, which is expected to be mass-produced in 2028. The third wafer fab will use 2-nanometer or more advanced process technology for production at the end of the 2020s.

In a press release from the U.S. Department of Commerce, TSMC Chairman and President Wei Zhejia used the word "Accelerate" for the first time to explain the U.S. layout. Entering the stage of the U.S. CHIPS and Science Act is a critical step in strengthening the U.S. semiconductor ecosystem. The signing of this agreement will help us develop the most advanced semiconductor manufacturing technology in the United States.

TSMC said that TSMC Arizona is at the forefront of semiconductor manufacturing in the United States (Onshoring), and plays a vital role in enhancing the competitiveness of the United States and its leadership in the 5G/6G and AI era.

"Made in the USA" has become a popular subject, and the industry believes that once the subsidies are issued, the development of the most advanced semiconductor process in the United States will be promoted at full speed.

TSMC A16 is regarded as an enhanced version of 2 nanometers, but the addition of the new transistor architecture of Super Power Rail means that another key technology will be replicated in the U.S. factory.

From the perspective of TSMC's iterative process evolution, the 4/5 nanometer process will be mass-produced in 2020, five years after the first plant in the United States will start mass production next year; if the second plant starts to include 2 nanometers, it is scheduled to be mass-produced in 2028, and there will be only three years between the scheduled mass production in Taiwan in 2025, shortening the time difference for catching up. A16 is planned to be mass-produced in 2026 and will be put into the US plant, but Taiwan should have advanced to A14 by then, and the most advanced will still remain in Taiwan.

People familiar with the matter revealed that the US Department of Commerce will issue at least US$1 billion to TSMC by the end of the year, and stricter supervision will follow. The US Department of Commerce document states that TSMC cannot repurchase shares within five years unless there are special circumstances; if the project's profit exceeds expectations, the applicant must return a certain proportion of funds to the government after reaching the agreed threshold, which is equivalent to receiving dividends. This part refers to the subsidiary TSMC Arizona, which is estimated to have little impact on the parent company.

TSMC starts construction of 10 factories at the same time

As geopolitical issues continue to burn, TSMC is rushing to expand its global layout. In 2025, including projects under construction and new plants, the total number of plants built at home and abroad will reach ten. This is not only the first time in the company's history, but also a new record for the global semiconductor industry to promote the construction of ten plants at the same time, and will push the company's capital expenditure to resume high-year growth next year. Analysts estimate that TSMC's capital expenditure in 2025 is expected to reach US$34 billion to US$38 billion (approximately NT$1.1 trillion to NT$1.2 trillion), challenging a historical high. Regarding issues related to capital expenditure in 2025, TSMC's public relations department responded that the company has not yet announced its capital expenditure plan for 2025. For explanations of capital expenditures, please refer to the company's public information. As for capital expenditures in 2024, the explanation in the October earnings conference is the main focus. According to industry statistics, TSMC will have as many as ten new and ongoing plants around the world in 2025. Among them, there are seven under construction and new plants in Taiwan, which is the largest, covering advanced process wafer plants and advanced packaging plants. Taiwan's seven factories under construction and newly built include Hsinchu and Kaohsiung, which are 2nm mass production bases that continue to advance, with two factories in each place, totaling four factories. In terms of advanced packaging, it includes the plant named AP8 purchased from Innolux’s Southern Taiwan Science Park, the continued expansion of CoWoS in Central Taiwan Science Park, and the investment in advanced packaging CoWoS and SoIC in Chiayi, totaling three factories. Overseas, in 2025, factories will be built in the United States, Japan, and Europe simultaneously, including the official announcement that the construction of the second plant in Kumamoto, Japan will start in the first quarter of 2025, with the goal of mass production in 2027; the second plant of the U.S. Fab 21 and the new special process plant in Dresden, Germany continue to advance construction. Data shows that TSMC will build an average of five factories per year from 2022 to 2023; it is expected to build seven factories in 2024, including three wafer factories, two packaging factories, and two overseas factories. In 2025, the total number of factories under construction and newly built factories at home and abroad will reach ten, which will be a record-breaking first time and the first time in the global semiconductor industry. TSMC previously mentioned at the annual technology forum that the expansion of production capacity at home and abroad and other related layouts are all to meet and support customer needs. Since there are ten factories under construction and newly built in 2025, TSMC's capital expenditure in 2025 is expected to increase. TSMC's capital expenditure hit a record high in 2022, when it set a record of US$36.29 billion.

TSMC prepares for the future

TSMC's investments in EUV and High NA EUV technologies are expected to shape the future of semiconductor manufacturing. These massive investments will enable the production of increasingly powerful and efficient chips for a wide range of applications.TSMC is expected to receive its first high-NA extreme ultraviolet (EUV) lithography system, the "EXE:5000," from Dutch manufacturer ASML in September 2024, according to Business Korea. While media reports on the exact delivery date vary-some suggest installation at TSMC's Hsinchu R&D center by the end of this year-the exact timeline is less important than the broader impact.The key point is TSMC's evolving stance on this cutting-edge technology. Initially cautious, the company has now fully embraced high-NA EUV lithography to stay ahead in the competitive chip industry, where demand for ultra-fine processes for AI is growing rapidly.The adoption of high-NA EUV scanners is essential for TSMC to develop processes below 2 nanometers. These advanced systems increase the numerical aperture from 0.33 to 0.55, enabling higher resolution and more precise patterning of semiconductor wafers.TSMC plans to incorporate the High NA EUV scanner into its 1.4nm (A14) process, which is expected to enter mass production in 2027.  However, these advanced lithography systems will not be immediately available. Rigorous testing, fine-tuning, and process optimization are required before they can be integrated into high-volume production.By the time these systems are fully operational, TSMC expects to advance to the A10 node, which means its technology capabilities will be several generations higher than they are today. This timeline is consistent with TSMC's broader roadmap to advance its chip manufacturing processes.During TSMC's third-quarter 2024 earnings call, CFO Wendel Huang outlined the company's node development plans. "We're going to launch N2 in 2026. There's also some preparation cost to launch N2. And as we move each leading node, more and more advanced, that preparation cost is going to get bigger and bigger," he said. Each High NA EUV system costs about $384 million. Still, TSMC's technological leadership in High NA EUV is expected to attract more high-profile customers seeking cutting-edge chipmaking capabilities. This could further widen the gap between TSMC and its competitors, especially Samsung Electronics, which needs to play catch-up in acquiring High NA EUV equipment. TSMC has built a solid foundation with its current EUV technology. The company's journey in EUV began in 2019 with the launch of the N7+ process, marking the industry's first commercial EUV lithography process. Since then, TSMC has rapidly expanded its EUV capabilities, with the number of EUV systems growing 10-fold between 2019 and 2023. The company currently accounts for 56% of the global EUV installed base. The foundry giant continues to leverage EUV in subsequent processes, including N5 and N3. Industry estimates indicate that TSMC operated about 10 EUV systems when it launched the N7+ process in 2019. TSMC acquired 84 EUV systems in 2022 and more than 100 in 2023. TSMC's approach to EUV is systematic and customer-centric. The company carefully evaluates new technology innovations based on their maturity, cost, and potential customer benefits before integrating them into mass production. "TSMC plans to first introduce High NA EUV scanners for R&D to develop the relevant infrastructure and patterning solutions required by customers to drive innovation," the company told The Register.

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