TSMC CFO says the company is accelerating the construction of its Arizona plant to seize opportunities arising from artificial intelligence, the "super megatrend".

Source: Global Market Report

TSMC Chief Financial Officer Wendell Huang said in an interview that customers are continuing to show a “multi-year supercycle of demand,” and TSMC is racing against time to ramp up production capacity at its Arizona plant.

Currently, the artificial intelligence sector is seeing an ongoing structural surge in demand. TSMC is accelerating its chip manufacturing layout in the United States, injecting an additional $100 billion in investment and substantially expanding its scale of investment in Arizona.

Following this new investment, TSMC’s total planned investment in Arizona has risen to $265 billion. This large-scale capacity expansion, driven by AI demand, has also prompted the company to raise its full-year capital expenditure forecast, with the range set at $60 billion to $64 billion.

Wendell Huang stated that this additional investment is based on the strong customer orders from the US market and the robust support from the US government.

“We are facing sustained, long-term strong industry demand, and we have absolutely no intention of handing over market share to other competitors,” said Huang. “As long as artificial intelligence remains the prevailing long-term development trend, we can continue to create profit growth for our shareholders.”

Huang explained that, to meet surging customer demand, TSMC is fully optimizing advanced process capacities, including rapidly upgrading its 5-nanometer production line to a more advanced 3-nanometer process, in order to meet client requirements.

The nanometer value represents the size of a single transistor on a chip. The smaller the transistor size, the more transistors can be integrated onto a single chip. Generally, the smaller the process nanometer value, the more powerful and energy-efficient the chip is.

Regarding the progress of TSMC’s US plant, the CFO revealed that the first-phase factory using the 4-nanometer process has officially entered production and operation.

“In the coming quarters, the capacity of this plant will continue to expand,” he said. The 2-nanometer process has already begun contributing to revenue in the second quarter of this year and will become a new growth engine for the company in the third quarter.

At the same time, Huang admitted that the cost of building fabs in the United States is four to five times higher than in Taiwan. Although with the expansion of overseas production, short-term profit dilution will increase, this overseas capacity expansion will ultimately further enhance and complete the US domestic semiconductor industry ecosystem.

Regarding the allocation of this additional $100 billion investment, Huang stated: “This investment will cover both front-end wafer manufacturing plants and back-end advanced packaging plants.”

On the day of the earnings release, TSMC’s share price closed up more than 1%; however, last Friday, the stock fell by 7%, and so far this year, its share price has risen about 48%.

Commenting on the company’s stock performance, Huang said that TSMC cannot control financial market trends. “What we can do is focus on strengthening the company’s fundamentals.” He added that despite soaring costs across various industry components, TSMC’s strategic focus on the high-end market has made the impact negligible.

This leading foundry is investing in various future growth tracks. On the development prospects of physical artificial intelligence (physical AI), he mentioned that TSMC recently set up a joint venture with Sony in image sensors, which is one of the company’s strategic initiatives to lay out dedicated specialty chip technology and help clients achieve long-term business growth.