TSMC's 2nm Capacity Expansion Rumor Sparks Potential Gains for Semiconductor Equipment Makers, Says Wells Fargo

Wells Fargo has indicated that Taiwan Semiconductor Manufacturing (TSM.US) may expand its 2nm production capacity, which could serve as a positive development for semiconductor equipment companies, according to a report.

Analyst Joe Quatrochi wrote in the report: "While we are still awaiting further confirmation and more details such as timing, scale, and process node, we believe this should be viewed as a potential incremental positive for semiconductor equipment companies." He added: "We believe the 'Silicon Prairie' — the Dallas area in northern Texas — would be a reasonable location for TSMC's second US campus, given that the region already hosts multiple wafer fabs (such as Texas Instruments, Samsung, Coherent, and now Terafab). In addition, TSMC also has a design service center in Austin."

TSMC's major 2nm customers include Apple (AAPL.US), NVIDIA (NVDA.US), AMD (AMD.US), and Qualcomm (QCOM.US). Other customers include Google (GOOG.US, GOOGL.US), Broadcom (AVGO.US), Marvell Technology (MRVL.US), Amazon (AMZN.US), and OpenAI.

Recent reports indicate that TSMC is accelerating its 2nm capacity expansion as major customers including Apple, NVIDIA, AMD, Qualcomm, and MediaTek have increased their orders by 10% to 20%. The reports state that TSMC's monthly capacity for 2nm chips could reach 120,000 wafers by the end of the year, up from previous market estimates of 90,000 to 100,000 wafers. The accelerated pace of capacity expansion would bring forward the capacity level originally scheduled to be reached in 2027.

TSMC is reportedly considering the Dallas area in Texas as a candidate site for its second US wafer fab. TSMC is currently building a large production complex in Phoenix, Arizona, with an investment scale of $265 billion, comprising six wafer fabs, two advanced packaging plants, and one R&D center. The proposed Dallas production base is reportedly considering adding six advanced wafer fabs, with an investment scale expected to exceed that of the Arizona campus, and may potentially introduce more advanced process technologies.