On November 26, TSMC celebrated a significant milestone in its journey of semiconductor manufacturing by holding a ceremony to bring equipment into its new 2nm factory located in KaohsiungOriginally, the timeline for the Kaohsiung facility indicated that machines would enter the factory by mid-2025, with production expected to commence by the end of that yearHowever, propelled by surging demand for chips, the timeline was accelerated by six months, thereby pushing forward the global schedule for 2nm manufacturing as well.

The anticipated capacity for 2nm production is set to kick off in 2025, an affirmation of the reports that TSMC's advancements in 2nm technology have exceeded expectationsWith regard to the plant configurations, among the 18 factories that TSMC has established as of 2023, the P1 and P2 facilities in Baoshan are earmarked for 2nm productionEquipment for P1 is expected to arrive by April 2024 and go into verification testing by the fourth quarter of 2024. It is projected to reach mass production in 2025, with an initial capacity of about 30,000 wafers per month

Additionally, newly constructed facilities F20 in Hsinchu and F22 in Kaohsiung are also slated for 2nm productionF20 is projected to ramp up capacity by the fourth quarter of 2025, also targeting approximately 30,000 wafers per monthMeanwhile, F22 aims to begin commercial production in the first quarter of 2026, likewise with a monthly capacity of 30,000 wafersBy 2026, TSMC might achieve a total monthly capacity of at least 90,000 wafers for its 2nm technology, which would ensure a steady and reliable supply of 2nm chips to global customers.

As TSMC's 5nm capacity utilization has already reached its limits, and with 3nm capacity expected to hit 100% utilization by 2025, the upcoming launch of the 2nm process instills confidence in TSMC's continued leadership in the advanced manufacturing marketThe timing seems fortuitous, as TSMC has been preparing extensively for its 2nm advancements, with not only the arrival of equipment but also other necessary elements being discreetly finalized.

The broader semiconductor market, after a challenging 2023, is beginning to flourish in large part due to the rise of generative AI

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TSMC reaped substantial benefits in 2024, completing its annual performance targets within just ten monthsAs of October 2024, TSMC reported net income reaching NT$314.24 billion, showcasing a year-on-year increase of 29.2%. The ten-month revenue total stood at NT$2.34 trillion, a noticeable contrast when compared to 2023’s annual net revenue of NT$2.16 trillionSuch optimistic market conditions contributed to TSMC’s market valuation eclipsing NT$10 trillion in October 2024.

The explosion of AI-related applications has prompted various chip manufacturers to fiercely compete for TSMC's 3nm capacityTSMC’s leadership has indicated that the demand for AI-related services is exceptionally robust and genuinely reflective of real market needsTSMC’s Chairman Wei Zhejia has expressed confidence about the soaring interest in the 2nm process, reporting that the planned capacity for 2nm has already surpassed that of the 3nm process.

The local governmental departments have also been actively coordinating their efforts to support TSMC’s investments in Kaohsiung

For instance, local officials have emphasized the need to expedite the development of the new terminal at Kaohsiung's Xiaogang Airport, taking into consideration the air freight demands of the semiconductor industry over the next decadeLocal authorities are committed to completing the first phase of construction by 2032 to enhance the semiconductor supply chain efficiencies.

Local departments are also addressing TSMC’s needs for senior talents and employee housing in a proactive mannerThey are recommending various solutions, such as increasing the number of classes in elementary schools and experimental high schools, improving transportation links, and establishing water recycling plants.

TSMC’s successful establishment in Kaohsiung is pivotal not only for the company but also for the region's economic transformationConsequently, local departments have coordinated with dozens of related materials, equipment, and supply chain vendors to facilitate this collaboration, thus ensuring TSMC has the necessary support for its operations.

As for the clientele of the new 2nm process, TSMC appears to have no shortage of prospective buyers

Apple has historically been one of TSMC’s most loyal clients, adopting TSMC's advanced process technologies for its productsIn 2023, Apple utilized TSMC’s 3nm technology, and the relationship between the two companies has grown increasingly symbiotic over the yearsInterestingly, TSMC reportedly guarantees 100% defect-free chips to Apple, covering any manufacturing costs associated with defective chips.

Industry analysts project that while the latest iPhone series may not yet incorporate TSMC's cutting-edge 2nm process, the iPhone 18 Pro series, set to launch in 2026, will likely be among the first smartphones equipped with TSMC’s 2nm processorsAdditionally, AMD is anticipated to become another significant customer for the 2nm technology, as the company has already adopted TSMC's 3nm process for its EPYC Turin processors, among others.

Looking further, it can be inferred that most customers currently utilizing 3nm technology will seamlessly transition to the new 2nm process once it becomes available, which may extend the customer base to include major names such as MediaTek, Qualcomm, Intel, and NVIDIA.

In summary, as TSMC secures its foothold with the leading clients in the semiconductor industry, it is poised not only to meet the demands of its current partners but also to potentially exceed their expectations with groundbreaking technology such as 2nm chips

Despite some competitors—like Samsung Electronics attempting to ramp up its own 2nm production—TSMC's current dominance seems unwaveringThe South Korean giant has ambitions to produce 2nm with plans announced for 2025, but it grapples continuously with inefficiencies, including low yields and insufficient orders in its 3nm production lines.

Meanwhile, Intel is focusing on its next-generation technology, having canceled its 20A process in favor of a direct transition to 18A technology, projecting a 2025 launch for its integrated features aimed at overcoming previous setbacks in advanced manufacturing that had seen the company trailing behind TSMC.

Moreover, Japan's Rapidus is eyeing a 2027 introduction for 2nm chips, bolstered by governmental support aimed at revitalizing the local semiconductor landscapeOverall, while 2025 might unveil more details about 2nm developments, full-scale implementations—especially from competitive players—are likely to emerge in subsequent years.

TSMC has even begun laying the groundwork for the 1nm process amid its ongoing advancements

Reports indicate that the company has adjusted pricing strategies for its clients within 2025, aiming to mitigate the impact of high operational costs associated with overseas facilities and 2nm deployment expenses.

In a recent forum centered on advanced manufacturing initiatives, TSMC disclosed that it not only has solid plans for 2nm but is also preparing for its 1.6nm related work to ensure it stands at the forefront of technology innovations for years to come.

As TSMC forges ahead, the legacy of encountering challenges seems to have been left behind since the infamous “40nm crisis” in 2008, where issues in yield with major partners put TSMC at riskThe company learned valuable lessons from that episode and has since molded itself into a powerhouse where the potential for internal competition is perhaps its only significant threat, as it continues to captivate the world's premier chip customers.