TSMC Abandons 28nm Factory, Shifts to 2nm?

According to insiders, TSMC (Taiwan Semiconductor Manufacturing Company) is making strategic changes to its Kaohsiung factory plans to ride the wave of AI (Artificial Intelligence). The company has decided to shift from its original mature process to a more advanced 2nm process, aiming to synchronize advanced manufacturing capabilities across northern and southern Taiwan. The construction of cleanrooms and electromechanical engineering at the Hsinchu Baoshan and Kaohsiung plants is on track to be completed around the same time, with mass production scheduled for the second half of 2025. The official announcement regarding the construction plans is expected to be made soon.

TSMC will hold a press conference on Thursday (20th), but due to the pre-conference silence period, the company's spokespersons have refrained from commenting on the Kaohsiung factory plan.

It has been revealed that TSMC has already submitted its 2nm plan for the Kaohsiung factory to the Ministry of Economic Affairs and the Kaohsiung City Government, seeking their assistance in water and power supply operations. The 2nm process, which employs power-intensive extreme ultraviolet (EUV) lithography equipment, requires a greater power supply compared to the 3nm process used in the Southern Taiwan Science Park. Whether TSMC's transition to the 2nm plan for the Kaohsiung factory necessitates a revised analysis of the environmental impact is a matter of significant concern for various stakeholders.

The investment in TSMC's 2nm project surpasses the initially planned investment for the 28nm process. This development is expected to provide a significant boost to the Kaohsiung City Government's semiconductor "S Corridor" initiative and foster new clusters of materials, chemicals, and equipment in the supply chain.

TSMC's decision to directly pursue the 2nm process at the Kaohsiung factory stems from the unexpectedly rapid growth and interest in AI opportunities. Several AI companies have shown a keen interest in TSMC's 2nm process, and major chip manufacturers like Apple and Nvidia have expressed their confidence in TSMC's 2nm process in terms of yield and power consumption.

While Intel, TSMC's formidable competitor, is also vying for AI chip orders in the 2nm process from Apple and Nvidia, Huang Renxun, CEO of Nvidia, has recently confirmed that TSMC's 2nm process will be exclusively adopted for their future generation server chips.

TSMC's main production hub for the 2nm process will initially be established in Hsinchu Baoshan, referred to internally as Fab 20. The company plans to construct four fabs (P1 to P4) for this purpose. The construction of the first fab (P1) is currently underway, with risk-assessment trial production anticipated in 2024 and mass production scheduled for the second half of 2025.

Insiders from TSMC's supply chain have disclosed that the company has informed equipment vendors to begin delivering 2nm-related machinery starting from the third quarter of next year. The installation of 2nm equipment at the Kaohsiung factory is estimated to commence just one month after the Hsinchu Baoshan factory.

Chungkang is another significant site for TSMC's 2nm production. The Central Science Park Administration is currently involved in urban planning adjustments, land acquisition agreements, and land requisition operations for this purpose. Although there have been local objections from golf club members and subsequent obstacles in terms of environmental assessments for the designated land, it is anticipated that TSMC's 2nm process will primarily focus on Hsinchu Baoshan and Kaohsiung in the initial phase.