Taiwan Semiconductor Doubles Down On 2nm Chips As AI Frenzy Fuels Billion-Dollar Buildout

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) is expanding its cutting-edge 2-nanometer facilities from seven to ten sites to meet the artificial intelligence frenzy.

The chipmaker informed government agencies, including the National Science and Technology Council (NSTC), that it will build three additional 2-nanometer fabs in Tainan’s Southern Science Park, complementing the existing 2nm production in Hsinchu (two fabs) and Kaohsiung (five fabs).

The investment, estimated at 900 billion Taiwan dollars ($28 billion), spans a 40-hectare site and could begin construction as early as next year, the Chosun Daily reported.

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Taiwan Semiconductor expects the new fabs to begin mass production by 2026, with a combined monthly output topping 100,000 wafers.

The chipmaker continues accelerating its shift to advanced processes. Smaller line widths reduce power consumption and boost performance, making next-generation chips crucial as AI workloads grow.

After ramping mass production of 3-nanometer chips, leading chipmakers — Taiwan Semiconductor, Samsung Electronics Co. Ltd. (OTC:SSNLF), Intel Corp. (NASDAQ:INTC), and Japan’s Rapidus — have entered the 2-nanometer race.

Taiwan Semiconductor Chairman C.C. Wei confirmed aggressive plans to scale production of 2-nanometer chips.

Industry estimates show Taiwan Semiconductor’s monthly 2-nanometer capacity doubling from 40,000 to 80,000–90,000 wafers by the end of next year.

By 2027–2028, 2-nanometer technology is expected to become mainstream, while Taiwan Semiconductor’s next-generation A16 (1.6-nanometer) node is set for mass production in 2028.

Rising Capital Expenditure Plans

Local reports project Taiwan Semiconductor’s capital spending could rise to as much as $50 billion — up roughly 20% from this year.

The company may allocate 70–80% of that spending to expanding 2-nanometer and A16 production, with the balance strengthening advanced packaging capabilities.

Advanced Packaging Becomes a Strategic Priority

As chip-scaling approaches physical limits, packaging has become essential to performance gains.

Taiwan Semiconductor is rapidly expanding capacity for its CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging technology — which stacks multiple chips on one substrate — and plans to triple output compared to two years ago.

Taiwan Semiconductor continues scaling globally, developing fabs not only in Taiwan but also in the U.S., Japan, and Germany, pushing toward ten advanced fabs worldwide.

Samsung Accelerates 2nm Comeback

Meanwhile, chip rival Samsung is accelerating its comeback in advanced chip manufacturing by scaling 2-nanometer production, stabilizing yields, and securing customers like Tesla Inc. (NASDAQ:TSLA).

Analysts expect Samsung to boost 2-nanometer capacity by 163% from 8,000 to 21,000 wafers per month by the end of 2025 as its Texas fab ramps up.

Improved yields of 55%–60% have driven new orders for Exynos processors, Apple Inc. (NASDAQ:AAPL) image sensors, and mining ASICs, with Qualcomm Inc. (NASDAQ:QCOM) potentially joining.

Samsung still trails Taiwan Semiconductor’s dominant 70.2% foundry share with 7.3%.

TSM Price Action: Taiwan Semiconductor shares were trading lower by 0.75% to $282.51 premarket at last check Tuesday.

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