TAIPEI (Taiwan News) — TSMC Chair and CEO C.C. Wei (魏哲家) on Thursday said that one-third of the firm's sub-2nm capacity will eventually be made at US plants, and he denied Intel joint venture rumors.
In an online investor conference in the afternoon, institutional investors showed strong interest in TSMC's investment layout in the US and its impact on gross profit margins, per CNA. TSMC Senior Vice President and CFO Wendell Huang (黃仁昭) said that as the impact of the Arizona plant emerges, second-quarter gross margins are expected to fall between 57% and 59%, a 0.8 percentage point drop from the first quarter at the midpoint.
Huang said that as the Kumamoto plant in Japan and the Arizona plants expand, the negative impact from overseas fabs will become more pronounced. He projected that in the early years of the next five-year period, overseas fabs will impact gross margins by about 2 to 3 percentage points, expanding to 3 to 4 points in the later years.
To mitigate this, Huang said TSMC will scale up operations in Arizona to improve cost structure and continue working with customers and suppliers to manage the impact. In the long term, gross profit margins are expected to exceed 53%, said Huang.
In addition, Wei said that the expanded investment in Arizona is in response to strong AI demand from key clients such as AMD, Apple, Nvidia, Qualcomm, and Broadcom. Wei said the second fab in Arizona is ahead of schedule by at least two quarters, and the third fab will use 2 nm and A16 process technologies, but due to labor shortages and pending permits, no definitive timeline has been set.
Wei said TSMC plans to build six wafer fabs in Arizona. The fourth fab will adopt 2 nm and A16 processes, while the fifth and sixth fabs will feature even more advanced technologies. Once completed, Wei predicted that approximately 30% of TSMC’s sub-2nm and more advanced process capacity will come from the Arizona plants.
Regarding market speculation that TSMC will form a joint venture with Intel to operate Intel’s wafer fabs, Wei reiterated that the company has not engaged in any discussions with other companies about joint ventures, technology licensing, or technology transfers, firmly denying the rumors of a joint venture with Intel.
As for potential price increases at US fabs, Huang said that geographic diversification brings value to customers. TSMC has started discussions with clients to reflect that value, and feedback so far has been positive, said Huang.
Commenting on the progress in Japan, Wei said the first plant will enter mass production at the end of 2024, and construction for the second plant will begin later this year, depending on local infrastructure readiness. Meanwhile, in Europe, Wei said TSMC is proceeding with plans to build a fab in Dresden, Germany.
At the same time, TSMC is continuing to expand its investments in Taiwan, planning to build 11 new wafer fabs and 4 advanced packaging plants in the next few years.
