TSMC May Build Up to 12 Wafer Fabs

Recently, market reports highlighted ongoing challenges for TSMC's wafer fabrication operations in Arizona, including high costs and thin profit margins. Industry insiders note that supply chain constraints, talent shortages, equipment maintenance, corporate culture, and labor regulations have caused U.S. operations to lag behind TSMC's facilities in Taiwan. Analysts predict that profits in Arizona could drop significantly by the third quarter of 2025.

Despite short-term profitability pressures, TSMC has confirmed plans to expand its Arizona campus. The company intends to add two more wafer fabs to the existing six, while advanced packaging capacity will grow from two fabs to three or four. This expansion could bring the total number of Arizona wafer fabs to 12, with high capital expenditures expected between 2026 and 2028.

The high operational costs of TSMC's U.S. fabs have drawn market attention. In the third quarter of 2025, an unexpected power outage at a gas supplier halted production for several hours, resulting in the scrapping of thousands of wafers and a 99% drop in quarterly profits. This incident underscores the operational gap between TSMC's U.S. and Taiwan facilities.

Supply chain sources confirm that while TSMC is focused on domestic growth, the company remains committed to its overseas expansion strategy.

Meanwhile, TSMC's second wafer fab in Kumamoto, Japan, has been delayed due to lower-than-expected orders and the absence of a direct transition from 6nm to 2nm processes. The lack of major chip clients and Japan's high production ecosystem costs—such as Rapidus technology support, labor shortages, and expensive equipment—pose significant obstacles. TSMC's facility in Germany is experiencing similar slowdowns, with engineering work continuing but progress gradually decelerating.

Arizona remains the central focus of TSMC's international expansion. Chairman C.C. Wei confirmed plans to purchase a second land parcel near the new site to support additional capacity, aiming for a total of eight wafer fabs. Two advanced packaging plants, AP1 and AP2, are scheduled to begin construction in early 2026. Compared with wafer fabs, these packaging facilities are relatively easier to build, with AP1 expected to start mass production in 2028, focusing on SoIC and CoW technologies.

TSMC forecasts capital expenditures of $40–42 billion in 2025, with approximately 70% allocated to advanced processes, 10–20% to specialty processes, and another 10–20% for advanced packaging, mask production, and other areas. Market projections indicate that capital expenditure will rise to $44–46 billion in 2026, potentially exceeding $50 billion in 2027 and 2028.