TSMC is reportedly looking to expand its 2nm production footprint, as the Taiwan giant now plans to upgrade the second Kumamoto plant to a higher-end process.
TSMC Wants to Ensure That Its Second Kumamoto Fab Remains Relevant, Once It Comes Online In a Few Years
The AI industry is experiencing tremendous demand for high-end semiconductors, primarily due to the architectural performance upgrades enabled by the use of chips like the 2nm. We have NVIDIA, AMD, and ASIC manufacturers positioning their portfolios based on the process advancements brought about by Moore's Law, which is why the utilization of older nodes, such as 6nm, has decreased. According to a report by Taiwan's Mirror Media, TSMC is reportedly planning to upgrade its Kumamoto plant in Japan to a 2nm facility in response to the massive demand.
According to this magazine's investigation, TSMC has already prepared an internal analysis report for C.C. Wei's decision-making process, and it is highly likely that TSMC's Kumamoto Fab 2 in Japan will skip the 4nm process and go straight for the 2nm process.
Interestingly, the report claims that TSMC has experienced underutilization of fab capacity at its first Kumamoto facility, where the company introduced the 28nm node, targeting automotive chips. However, demand had already shifted towards newer technologies, resulting in TSMC suffering a loss. In a recent report by Nikkei Asia, it was discussed that TSMC's second facility in Japan will be upgraded from the original 6nm to 4nm production to meet customer demands; however, following an internal review, the plans are shifting towards the higher-end 2nm node.
Given that TSMC had chosen 4nm for the Kumamoto fab, it would've taken at least two years for the facility to reach mass production, and by then, clients like NVIDIA and others would bring in the demand for the 2nm process, which is why the Taiwan giant wants to factor in future demand for its operations in Japan. And reports claim that if TSMC switches cutting-edge chip production to the 2nd Kumamoto fab, the Japanese government is open to providing more incentives to aid with the additional costs.
We do know that Rapidus has been making massive strides in producing high-end chips onshore, as the Japanese chip giant has reportedly secured major 2nm customers and plans to mass-produce the node by early 2027, in a similar timeline to when TSMC's second Kumamoto fab might come online. Reports also claim that Rapidus has plans to scale up production to 1.4nm, which means the firm is emerging as a competitor in the foundry business. Rapidus' advancements may have prompted TSMC to upgrade its operations in Japan.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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