TSMC Mulls Advanced Chip Production At Japan Plant To Meet Soaring AI Demand: Report

The world’s largest chipmaker, Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), is reportedly contemplating producing its more advanced 4-nanometer chip at its second plant in Japan to meet the escalating demand for AI-related products.

Shift Towards Advanced Chips

The plant in Kumamoto, which commenced construction in late October, was initially intended for 6-nm and 7-nm chips. A smaller nanometer size typically signals a more advanced, more powerful chip.

The possible transition could force design revisions and delay the plant's launch, currently planned for 2027, according to a report by Nikkei Asia on Thursday.

Construction at the second Kumamoto plant has already been paused, with heavy machinery being removed from the site. TSMC is also delaying the installation of new equipment at its current Kumamoto plant, which makes mature chips for industrial, consumer electronics, and automotive uses, the report said.

TSMC often pauses projects to adjust for market shifts, as seen in Kaohsiung, where it revamped plans from 6-nm and 28-nm production to more advanced 2-nm technology.

The company did not immediately respond to Benzinga‘s request for comment.

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TSMC Races to Meet Surging AI Chip Demand

TSMC’s potential shift to 4-nanometer production technology in Japan is a response to the surging demand for AI-related products. The company is also expanding its 2-nanometer chip production from seven to ten fabs to meet surging AI demand. The $28 billion investment in Tainan's Southern Science Park will add three fabs, complementing existing sites in Hsinchu and Kaohsiung. Production could start by 2026, with total monthly output exceeding 100,000 wafers.

This demand has been driven by tech giants such as Nvidia Corp. (NASDAQ:NVDA), Alphabet Inc.‘s (NASDAQ:GOOGL) (NASDAQ:GOOG) Google, Amazon.com Inc. (NASDAQ:AMZN), and MediaTek, as they race to secure capacity for next-generation AI chips. This demand has reportedly left TSMC with no spare room, despite aggressive expansion efforts.

Even Elon Musk said Tesla Inc. (NASDAQ:TSLA) is pressuring its chip suppliers to accelerate production well beyond normal semiconductor timelines to keep up with its next-gen AI hardware plans. He praised TSMC and Samsung Electronics Co. (OTC:SSNLF) for "moving like lightning," but cautioned that even their rapid pace could become a limiting factor if they can't meet Tesla's surging AI chip needs.

On Wednesday, TSMC posted NT$343.61 billion ($11.01 billion) in net revenue, up 24.5% year-over-year but down 6.5% month-over-month. For January–November, revenue reached NT$3.47 trillion ($11000 billion), marking a 32.8% year-over-year increase.

Benzinga's Edge Rankings place TSMC in the 93rd percentile for quality and the 86th percentile for growth, reflecting its strong performance in both areas. Check the detailed report here. 

Price Action: On a year-to-date basis, TSMC stock climbed 53.85% as per data from Benzinga Pro. On Tuesday, it fell 2.22% to close at $310.14.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.