C.C. Wei
Thank you, Wendell. Good afternoon, everyone. First, let me start with our near-term demand outlook. But before that, I would like to mention the earthquake during Lunar New Year. On January 21, Taiwan experienced a 6.4 magnitude earthquake under Richter scale, followed by several significant aftershocks. Although a certain number of wafers in process were impacted and have to be scrapped, we worked tirelessly and were able to recover much of the lost production, demonstrating the resilience of our operation in Taiwan. I want to recognize and deeply [sense] all of our employees and our suppliers for their dedication and hard effort over the Lunar New Year holiday. I would also like to extend our great appreciation to our customers for their understanding and support during this time.
Now let me talk about the first quarters result. We concluded our first quarter with revenue of US$25.5 billion. Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued growth in AI-related demand.
Moving to second quarter 2025, we expect our business to be supported by strong growth of our 3-nanometer and 5-nanometer technologies. Looking at the full-year of 2025, we expect Foundry 2.0 industry growth to be supported by robust AI-related demand and a mild recovery in other end market segments. In January, we had forecast a Foundry 2.0 industry to grow 10 points year-over-year in 2025, which is consistent with IDC's forecast of 11% year-over-year growth for Foundry 2.0.
Now let me talk about the recent tariff. We understand there are uncertainties and risk from the potential impact of tariff policies. However, we have not seen any change in our customers behavior so far. Therefore, we continue to expect our full-year 2025 revenue to increase by close to mid-20s percent in U.S. dollar term. We might get a better picture in the next few months, and we will continue to closely monitor the potential impact to the end market demand and manage our business prudently. Amidst that uncertainties, we continue to focus on fundamentals of our business with our technology leadership, manufacturing excellence and customer trust to further strengthen our competitive position. As such, we are confident TSMC can continue to outperform the Foundry 2.0 industry growth in 2025.
Now I'll talk about our AI demand outlook. We continue to observe robust AI-related demand from our customers throughout 2025. We reaffirm our revenue from AI accelerators to double in 2025. The AI accelerators will define as AI GPU, AI ASIC and HBM controllers for AI training and inference in the data center. Based on our customers' strong demand, we are also working hard to double our CoWoS capacity in 2025 to support journeys.
Recent developments are also positive to AI's long-term demand outlook. In our assessment, the impact from AI recent models, including DeepSeek, will drive greater efficiency and help lower the barrier to future AI development. This will lead to wider usage and greater adoption of AI models, which all require use of leading-edge silicon. Thus, these developments only serve to strengthen our conviction in the long-term growth opportunities from the industry megatrend of 5G, AI and HPC.
To address the structural increase in the long-term market demand profile, TSMC employed a disciplined and revolved capacity planning system. This is especially important when we have such high forecasted demand from AI-related business. Externally, we work closely with our customers and our customers are customers to [pan out] capacity. Internally, our planning system involves multiple teams across several functions to assess and evaluate the market demand from both a top-down and bottom-up approach to determine the appropriate capacity build. Based on our planning framework, we are confident that our revenue growth from AI accelerators will approach a mid-40s percentage CAGR for the next five years period starting from 2024.
Next, let me talk about TSMC's additional US$100 billion investment plan to expand in Arizona. All our overseas decisions are based on our customers' need, they value some geographic flexibility and necessary level of government support. This is also to maximize the value for our shareholders. With a strong collaboration and support from our leading U.S. customers and the U.S. Federal state and city government, recently announced our intention to invest an additional US$100 billion in advanced semiconductor manufacturing in the United States.
This expansion includes plans for three additional wafer manufacturing fabs to advice packaging fabs and a major R&D center. Combined with our previously announced plan to build three advanced semiconductor manufacturing fab in Arizona, this brings our total investment in the U.S. to US$165 billion to support the strong multiyear demand from our customers.
Our first fab in Arizona has already successfully entered high-volume production in 4Q 2024, utilizing N4 process technology with a yield comparable to our fab in Taiwan. The construction of our second fab, which will utilize the 3-nanometer process technology is already complete, and we are working on speeding up the volume production schedule based on the strong AI-related demand from our customers.
Our third and fourth fab will utilize N2 and A16 process technologies and with the expectation of receiving all the necessary permits, are scheduled to begin construction later this year. Our fifth and sixth fab will use even more advanced technologies. The construction and ramp schedule for this fab will be based on our customers' demand. We also plan to build two new advanced packaging facilities and establish an R&D center in Arizona to compete the AI supply chain. Our expansion plan will enable TSMC to scale up to a giga-fab cluster to support the needs of our leading-edge customers in smartphone, AI and HPC applications.
With this additional US$100 billion investment plan to expand our leading-edge capacity in Arizona, I would also like to mention that TSMC is not engaged in any discussion with other companies regarding any joint venture technology licensing or technology transfer and sharing. After completion, around 30% of our 2-nanometer and more advanced capacity will be located in Arizona creating an independent leading edge semiconductor manufacturing cluster in the U.S.
It will also create greater economies of scale and help foster a more complete semiconductor supply chain ecosystem in the U.S. Thus, TSMC will continue to play a critical and integral role in enabling our customers' success, while remaining a key partner in enabling all the strength and leadership of the U.S. semiconductor industry.
Next, in Japan, thanks to the strong support from the Japan Central, Prefecture and local government, our first specialty technology fab in Kumamoto has already started volume production in late 2024 with a very good yield. The construction of our second specialty fab is scheduled to start later this year, subject to the readiness of the local infrastructure.
In Europe, we have received strong commitment from the European Commission and the German Federal state and city government. We are on track with our plan to build a specialty technology fab in Dresden, Germany. In Taiwan, with support from the Taiwan government, we plan to build 11 wafer manufacturing fab and four advanced packaging facility over the next several years.
Volume production of N2 is expected to start in second half 2025, and we are preparing for multiple phases of 2-nanometer fabs in both Hsinchu and Kaohsiung Science Parks to support the strong structural demand from our customers. By expanding our global footprint for continuing investment in Taiwan, TSMC, can continue to be the trusted technology and capacity provider of the global logic IC industry for years to come, while delivering profitable growth for our shareholders.
Finally, I'll talk about our N2 status and A16 introduction. Our 2-nanometer and A16 technology is the industry in addressing the insatiable need for energy-efficient computing and almost the innovators – almost all the innovators are working with us.
We expect the number of new tapeout for 2-nanometer technology in the first two years to be higher than both 3-nanometer and 5-nanometer in their first two years, fueled by both smartphone and HPC applications.
N2 will deliver full-node performance and power benefits with 10% to 15% speed improvement at the same power or 20% to 30% power improvement at the same speed and more than 15% chip density increase as compared with N3E. N2 is well on track for volume production in the second half of 2025 are scheduled with a ramp profile similar to N3. With our strategy of continuous enhancement, we also introduced N2P as an extension of N2 family, N2P featured further performance and power benefits on top of N2 and volume production is scheduled for second half 2026.
We also introduced a 16 feature in super power rail or SPR as a separate offering. Compared with the N2P, A16 provides a further 8% to 10% speed improvement at the same power of 15% to 20% power improvement at the same speed and additional 7% to 10% chip density gain. A16 is best suited for specific HPC products with complex signal route and dense power delivery network. Volume production is scheduled for second half 2026. We believe N2, N2P, A16, and its derivatives will further extend our technology leadership position enable TSMC to capture the growth opportunities well into the future.
