TSMC announced Thursday a sweeping global expansion of its 3-nanometer chip production, adding capacity simultaneously in Taiwan, the United States, and Japan as surging demand for artificial intelligence semiconductors continues to strain supply. The announcement came during an investor conference following the company's record first-quarter earnings, in which profit jumped 58% year-over-year on the back of relentless AI chip orders.
A Three-Continent Buildout
Chairman C.C. Wei outlined the expansion plan at TSMC's quarterly investor conference on Thursday. In southern Taiwan's Tainan Science Park, the company is building new 3nm production lines set to begin mass production in the first half of 2027, while also converting existing 5nm equipment to support 3nm output. In Arizona, construction of the company's second fab has been completed, with commercial production using the 3nm process slated for the second half of 2027. And in Kumamoto, Japan, TSMC's second fab will adopt 3nm technology with volume production scheduled to begin in 2028.
Wei said the expansion reflects a departure from TSMC's traditional capacity planning, as AI applications, smartphones, automotive electronics, and Internet of Things devices drive unprecedented demand for advanced chips. The company will also optimize capacity sharing across its 7nm, 5nm, and 3nm lines to accelerate supply.
Record Earnings Fuel the Push
The expansion comes as TSMC's financial results underscore the depth of demand. First-quarter revenue reached $35.9 billion, slightly above the high end of the company's guidance and up 40.6% from a year earlier. Gross margins hit 66.2%, while operating margins reached 58.1%, both exceeding expectations. Advanced chips sized at 7 nanometers or smaller accounted for roughly 74% of total wafer revenue, with 3nm alone making up 25%.
Looking ahead, TSMC projected second-quarter revenue of $39 billion to $40.2 billion, representing about a 10% sequential increase, and revised its long-term gross margin target upward to 56% and higher through the cycle.
Broader Context
The three-continent buildout marks TSMC's most aggressive capacity push at a single process node, driven by customers including Apple that rely on the foundry for their most advanced chips. At the same investor conference, Wei also noted that TSMC is investing in advanced Chip-on-Panel-on-Substrate assembly technology expected to enter mass production in the coming years. Meanwhile, TrendForce reported that all four of TSMC's planned U.S. fabs are fully booked, suggesting demand will only intensify as AI workloads grow.