The company said growth will be driven largely by demand for artificial intelligence (AI) and high-performance computing, which are expected to account for around 55 per cent of the total market. Smartphones are projected to contribute 20 per cent, while automotive applications are expected to make up around 10 per cent.

To meet rising demand, TSMC said it is accelerating capacity expansion, particularly in 2025 and 2026. The company plans to build nine phases of wafer fabrication plants and advanced packaging facilities in 2026, reflecting the scale of anticipated growth.

The chipmaker is also preparing to expand production of its most advanced technologies. Capacity for its 2-nanometre process and next-generation A16 chips is expected to grow at a compound annual rate of around 70 per cent between 2026 and 2028.

Advanced packaging is another area of focus. TSMC said capacity for its CoWoS (Chip on Wafer on Substrate) technology - widely used in AI processors, including those designed by Nvidia—is forecast to increase at an annual rate of more than 80 per cent from 2022 to 2027. Demand for AI accelerator wafers is also expected to rise sharply, with projections indicating an eleven-fold increase between 2022 and 2026.

Alongside its technology roadmap, TSMC continues to expand its global manufacturing footprint.

In the United States, its first fabrication plant in Arizona is already in production. Equipment installation for a second facility is planned for the second half of 2026, while construction of a third plant is under way. Work on a fourth fab and the site’s first advanced packaging facility is expected to begin during the year. The company anticipates output from the Arizona operations will increase 1.8 times year-on-year by 2026, with production yields comparable to those achieved in Taiwan. TSMC has also completed the purchase of additional land in the state to support future expansion.

In Japan, the company’s first plant is now in volume production, manufacturing chips using 22-nanometre and 28-nanometre processes. Plans for a second facility have been upgraded to include 3-nanometre technology, reflecting strong market demand.

Meanwhile, TSMC’s facility in Germany remains under construction. The site is expected initially to produce 28-nanometre and 22-nanometre chips, with plans to introduce more advanced 16-nanometre and 12-nanometre technologies at a later stage.

The company’s updated outlook underscores the accelerating role of AI and advanced computing in shaping semiconductor demand, as well as the increasing importance of global manufacturing capacity to support the industry’s expansion.

By: DocMemory
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