TSMC speeds up Arizona expansion to meet AI chip demand

Taiwan Semiconductor Manufacturing Co. (TSMC) is accelerating construction of its Arizona chipmaking facilities as it looks to capitalise on what it describes as a multi-year AI demand "megatrend," according to the company's chief financial officer.

Speaking to CNBC, CFO Wendell Huang said the world's largest contract chipmaker is expanding its US manufacturing footprint to meet strong customer demand while benefiting from government support.

"We're seeing this strong-structure, multi-year demand, and we do not plan to leave any food on the table for anybody else," Huang said. "As long as the megatrend is right, then we're able to continue to deliver the profitable growth to our shareholders."

Arizona investment grows as AI demand accelerates

TSMC recently committed an additional $100 billion to expand its Arizona operations, raising its total planned investment in the state to $265 billion.

The company also increased its projected full-year capital expenditure to between $60 billion and $64 billion, reflecting continued demand for AI chips and data centre infrastructure.

Huang said the expansion is being driven by robust US customer demand and government backing.

"We're seeing this strong-structure, multi-year demand," he said, adding that TSMC intends to maximise growth opportunities as AI adoption continues.

Advanced chip technology to drive growth

To support customers, TSMC is rapidly shifting production capacity from its 5-nanometre process to more advanced 3-nanometre technology while ramping up 2-nanometre chips.

Huang said the Arizona facility's first phase, which manufactures 4-nanometre chips, is already operational and will continue expanding over the coming quarters.

"It's going to be bigger and bigger in the next few quarters," he said, describing 2-nanometre technology as the company's next major revenue driver after generating initial sales in the second quarter.

The company also plans to use its additional investment to build both front-end wafer fabrication plants and advanced packaging facilities in the US.

Company expects limited impact from geopolitical risks

While acknowledging that building factories in the US costs four to five times more than in Taiwan, Huang said the expansion would strengthen the broader American semiconductor ecosystem over the long term.

He also said TSMC expects only a limited impact from recent Middle East tensions because of its diversified supply chain and strategic inventory management.

On China, Huang said the company continues to comply with all export controls while serving Chinese customers, who account for about 8% of TSMC's total revenue.

Looking ahead, he added that emerging technologies such as physical AI and the company's partnership with Sony on image sensors are expected to support future growth.