TSMC Drops $400M ASML, Uses Cost-Smart 2nm Plan

According to Taiwanese media reports, TSMC is encountering new manufacturing challenges as it pushes its technology nodes down to 1.4nm (A14) and 1nm (A10), and has decided to forgo purchasing ASML's cutting-edge High-NA EUV lithography machines, which cost up to $400 million each.

In theory, acquiring these advanced High-NA EUV systems would directly address the technical hurdles. However, recent reports indicate that TSMC has opted for an alternative approach, implementing "photomask protective film" technology to advance its 2nm and other next-generation process developments.

This decision is largely driven by cost considerations. The price tag of a single High-NA EUV machine represents a massive capital investment, and TSMC believes the immediate value it provides does not justify such an expense. Instead, the company is taking a more cost-effective route by using protective films on photomasks in standard EUV lithography machines. These films shield the masks from particle contamination during exposure, enabling more precise chip fabrication without the need for ultra-expensive new equipment.

While the protective film solution avoids enormous equipment costs, it introduces new technical challenges. Producing 1.4nm and 1nm chips on standard EUV machines requires multiple exposures to achieve the necessary precision. This increases the frequency of photomask usage, which can slow production and potentially impact yield. TSMC will need extensive trial-and-error to ensure production reliability, making this a significant technical undertaking.

Another factor behind TSMC's decision may be equipment availability. ASML can only produce five to six High-NA EUV machines per year. For a company like TSMC, which requires dozens of standard EUV machines to meet the demand of major clients like Apple, investing huge sums into a handful of ultra-expensive systems does not align with long-term capacity planning.