TSMC Approves Record $45 Billion for New Fabs as 1nm Development Accelerates

TSMC's board on Tuesday approved a record $44.962 billion spending package for new fabs and capacity upgrades, marking the company's most aggressive expansion yet as it seeks to maintain its technology leadership over Intel and Samsung Foundry. The approval is part of TSMC's broader plan to spend between $52 billion and $56 billion on capital expenditures this year, with the remaining funds to be approved at a later board meeting.

This massive capital appropriation represents a significant acceleration from TSMC's typical quarterly spending patterns. In 2024, the company approved $17.141 billion in Q1, $15.247 billion in Q2, $20.657 billion in Q3, and $14.981 billion in Q4. The $44.962 billion approval in a single quarter underscores both the increasing cost of advanced semiconductor manufacturing and TSMC's determination to secure its position as the world's leading contract chipmaker.

While capital appropriations don't guarantee immediate spending, they provide management with the authority to execute on strategic projects. As TSMC's capital budgets have grown year-over-year, so have these appropriations, reflecting the company's commitment to maintaining its technological edge.

Strategic Allocation of Capital

TSMC announced earlier this year that it plans to allocate its 2026 capital expenditures with clear strategic priorities:

• 70-80% on advanced process technologies
• 10-20% on advanced packaging and mask making
• ~10% on specialty technologies

This allocation strategy is designed to make TSMC unbeatable in terms of state-of-the-art production capacity availability. By securing considerably more capacity than competitors like Intel and Samsung Foundry, TSMC ensures it can land major orders from large customers while making it less attractive for clients to outsource even partial production to rivals.

A10 Process Technology Leadership

The board meeting also saw the promotion of S.S. Lin, currently senior director at TSMC's R&D organization responsible for the company's A10 process technologies (1nm-class), to vice president status. This promotion signals strong upper management satisfaction with the A10 platform's development trajectory and preliminary results.

As a vice president, Lin will likely oversee multiple technology programs beyond the single A10 node and gain greater influence over roadmap priorities and resource allocation. The timing suggests the A10 program is transitioning from pure R&D toward finalization and customer adoption, requiring expanded leadership authority to execute effectively.

TSMC expects its A10 process, expected to be available to clients in 2030 or later, to enable monolithic chips with over 200 billion transistors. Industry speculation suggests TSMC may deploy High-NA EUV lithography tools with this node, representing another technological leap forward.

Market Implications

The aggressive spending approval comes as the semiconductor industry faces increasing geopolitical tensions and supply chain uncertainties. By expanding capacity now, TSMC is positioning itself to meet future demand while maintaining its technological lead. The company's ability to consistently outspend competitors on R&D and fab construction has been a key factor in its dominance of the contract manufacturing market.

With Intel and Samsung Foundry both investing heavily in their own manufacturing capabilities, TSMC's record spending approval demonstrates that the company isn't taking any chances. The combination of massive capacity expansion and accelerated development of next-generation process technologies suggests TSMC is preparing for a future where semiconductor manufacturing becomes even more critical to global economic and technological leadership.

The approval also reflects the broader industry trend of increasing fab costs. As process nodes become more complex and require more sophisticated equipment, the capital requirements for maintaining technological leadership continue to rise. TSMC's willingness to commit record amounts of capital indicates confidence in both the demand for advanced semiconductors and its ability to maintain its competitive advantages.

For customers ranging from Apple to NVIDIA to AMD, TSMC's aggressive expansion means continued access to cutting-edge manufacturing capabilities. For competitors, it represents a formidable challenge that will require matching or exceeding TSMC's investment levels to remain competitive in the race for advanced semiconductor manufacturing leadership.