TSMC Completes 2nm Equipment Installation Early
A recent report by UBS, a leading investment bank, forecasts that Taiwan Semiconductor Manufacturing Company (TSMC) will increase its capital expenditure to $37 billion in 2025. UBS highlights that TSMC’s spending in 2024 could hit the upper limit of its guidance at $32 billion, driven by the company's accelerated deployment of 2nm chip technology. Strong demand from Apple for next-generation iPhones and 3nm products is expected to boost TSMC’s annual revenue by 13% in the third quarter of this year.
UBS maintains an optimistic outlook on the impact of artificial intelligence on the semiconductor industry. The chip sector is known for its cyclicality, with manufacturers adjusting capacity based on forecasted orders. After companies like AMD and Intel complete product upgrades, foundries such as TSMC prepare for the next wave of technological advancements.
AI is projected to significantly benefit TSMC, with UBS estimating the company’s earnings per share to reach NT$40.14 in 2024, NT$53.27 in 2025, NT$60.75 in 2026, NT$69.5 in 2027, and NT$80.23 in 2028. High-performance computing and AI advancements are also expected to improve TSMC's gross margins, as the company expands its packaging capabilities. Current data indicates that TSMC’s CoWoS packaging capacity will grow to 40,000 wafers per month by the end of this year, and to 55,000 wafers per month by the end of 2024.
In terms of capital expenditure, UBS estimates that TSMC’s 2023 spending will reach the higher end of its guidance range of $28 billion to $32 billion. The report anticipates that TSMC’s 2025 expenditure could rise to $37 billion, primarily fueled by investments in 2nm chip production. Although TSMC plans to start mass production of 2nm chips next year, it is reportedly ahead of schedule in equipment deployment. There are rumors that TSMC might extend 2nm chip production to multiple sites across Taiwan.
Additionally, TSMC’s earnings growth will be bolstered by strong demand for its current manufacturing technologies. UBS predicts that the company’s N3 and N5 technologies (covering 3nm and 5nm processes) will continue to see robust demand in the latter half of 2024. Apart from Apple’s new smartphone lineup, typically launched in September, significant orders are also expected from companies like Qualcomm and MediaTek.
