Next TSMC plant likely to be in Taiwan, according to DIGITIMES Research

Jay Liang, DIGITIMES Asia, Taipei 0


In light of Taiwan Semiconductor Manufacturing Company's (TSMC) decision to suspend its plans for a new fabrication facility in the Longtan section of Hsinchu Science Park (HSP) due to local protests against land appropriation, DIGITIMES Research analyst and project manager Eric Chen speculates that the chipmaker's next plant may find its home in Taiwan with Taichung, Tainan, and Kaohsiung all being possible locations.

The potential shift in location is driven by the availability of land and existing infrastructure in the southern city, as well as the regulatory framework that encourages domestic investments. The decision will likely be made within the next two years for the project to remain on schedule to sustain the firm's production expansion pace in Taiwan.

TSMC's decision to drop its plans to build the new fab in Longtan was influenced by public objections, as approximately 80% of the land earmarked for the fab was privately owned. These challenges have led to considerations of setting up operations in Kaohsiung, a location where the city government has allocated land for semiconductor manufacturing to accommodate at least two fabs.

TSMC's latest and speculative global layout






2-90 nm, 0.11-0.35um, 0.35um and more mature, Global R&D Center


6/7nm, 22/28nm, planned Advanced Manufacturing Processes, possible new fab?


3-5nm, 12nm-0.13um, 0.11-0.18um, possible new fab?


2nm, possible new fab?








12/16nm, 22/28nm





12/16nm, 22/28nm



12/16nm, 22/28nm, possible new fab?

Source: TSMC; DIGITIMES Research, November 2023

Despite the possibility of establishing the new fab abroad and rumors of a second fab in Kumamoto, Chen states that the regulatory framework necessitates TSMC to make equivalent domestic investments, and will likely continue to invest in Taiwan despite several challenges. However, Taiwan remains an attractive location due to its well-developed industry cluster, government support, and efficient supply chain. TSMC's goal to mass-produce 2nm or even 1.4nm chips by 2027 necessitates a location decision by 2024-2025 to meet the one to 1.5-year construction and setup timeline.

Kaohsiung stands out as a potential fab location due to its availability and TSMC's decision to postpone the 7nm and 28nm facilities. The existing semiconductor infrastructure, proximity to other semiconductor companies, and access to necessary resources such as gases and chemical materials as the presence of companies such as UMC in Kaohsiung further support the city's appeal as a potential semiconductor manufacturing hub.

Chen emphasized that Taiwan remains the most cost-effective and efficient option for TSMC to set up the new fab, offering the highest investment efficiency and a convenient workforce. Taiwan boasts a robust ecosystem with its global R&D center already established in the HSP, technical expertise, and information exchange easily accessible, making it the ideal choice for advanced semiconductor research and development.

Challenges remain

With Central and Southern Taiwan being the most likely locations for the next fab, challenges such as water and electricity supply, waste generation and sewage treatment could affect the well-being of the nearby environment and its residents. The environmental impact assessments (EIA) are another significant issue that needs to be taken into consideration as EIAs for science park expansions (Taichung and Tainan) are more stringent compared to general industrial zones (Kaohsiung). With water scarcity in Southern Taiwan being a concern, Tainan has reservoirs and self-sustained wastewater treatment facilities. However, Kaohsiung grapples with uncertain future water shortages, particularly in the summer, which requires reliance on reclaimed water during certain periods. Managing and distributing water effectively remains a concern.

Electricity supply is another critical factor for TSMC's consideration with power supply being a nationwide issue in Taiwan and demand fluctuating based on economic conditions. When the economy thrives, electricity consumption sets records, but Taiwan's electricity generation cannot keep up with this surging demand. Chen noted as chip production advances to smaller nodes such as 1.4nm or 1nm, consumption will continue to rise as demand for power increases. With solar energy having limitations and wind power subject to intermittency, making it a more significant challenge, the supply of electricity for the new wafer plant will be an issue that TSMC must resolve.

In terms of human resources, while the northern regions of Taiwan are more developed in terms of talent and technical institutes, the uneven distribution of talent across the island remains manageable on a national scale.

As TSMC navigates the complexities of land acquisition and site selection, it is evident that Taiwan remains a cost-effective and efficient hub for TSMC, with the government's support, comprehensive ecosystem, and skilled workforce making it an ideal choice. The firm's strategic location decisions are vital for its future expansion and ensuring its continued leadership in the semiconductor manufacturing industry.

About the Analyst

Eric Chen is an Analyst and Project Manager at DIGITIMES Research. Chen received his Master's degree in International Business from Taiwan's Soochow University. His research focuses on foundry industry as well as IC assembly & packaging industry.

DIGITIMES Research Analyst and Project Manager Eric Chen