TSMC is said to increase prices by up to 10% on advanced production nodes next year to cover the costs of building new fabrication facilities.
In a move that signals its continued dominance in the semiconductor industry, Taiwan Semiconductor Manufacturing Company (TSMC) has unveiled its capital expenditure plans for the next three years. The company plans to invest approximately $44 billion, $47 billion, and $50 billion in 2026, 2027, and 2028 respectively.
This significant investment is expected to fund the expansion of TSMC's N2/N2P/A16-capable capacity. By late 2025, TSMC aims to rapidly increase its production capacity from less than 20,000 wafer starts per month (WSPM) in Taiwan, to 200,000 WSPM at multiple fabs in Taiwan and one in the U.S. by 2028.
The increased capacity is in response to the growing demand for TSMC's 2nm-class technology, for which its customers are willing to pay a premium. According to comments from AMD and Nvidia's CEOs, TSMC's customers seem ready for the price hikes associated with this advanced technology.
TSMC has announced that it will charge $30,000 per N2 wafer and $45,000 per A16 wafer. The company estimates that these increased prices could generate an additional $9 billion in earnings, which would be instrumental in maintaining its margin and/or increasing its Capital Expenditure (CapEx).
The market for TSMC's 3nm and 4nm/5nm-class technologies remains relatively limited in terms of competition from Intel Foundry and Samsung Foundry. This competitive advantage positions TSMC well to capitalise on the growing demand for its next-generation technology.
TSMC's 2nm-class technology offers significant performance, power, and area improvements compared to N3E and N3P. Multiple companies are already taping out N2/N2P chips and planning to mass produce them in 2026-2027.
However, it's worth noting that Intel's 18A, which features gate-all-around transistors and backside power delivery, is not yet qualified for mass production by third parties at Arizona fabs. This could potentially provide TSMC with an extended competitive edge in the market.
In conclusion, TSMC's ambitious capital expenditure plans and pricing strategy for its next-generation technology reflect the company's confidence in its ability to meet the growing demand for advanced semiconductors. The company's strategic investments and competitive advantages position it well to maintain its dominance in the semiconductor industry.
