Foundry Giant TSMC Breaks Ground On 5nm Chip Fab With 2020 Production Target

TSMC has broken ground on a new 5nm fab that will be used to produce the world's first 5-nanometer chips starting in 2020. TSMC builds chips for numerous manufacturers, including NVIDIA, Qualcomm and many others. The new Qualcomm Snapdragon 855 mobile chips coming this year are built on the TSMC 7nm technology. With TSMC promising the first chips using its new 5nm tech in 2020, that would likely mean we can expect the first 5nm chips from fabless semiconductor partners like Qualcomm and others, roughly in that same time frame.


The groundbreaking ceremony was held in Taiwan and the facility will reportedly be the largest manufacturing site for TSMC when completed. TSMC also expects that the capital investment will help it to extend the technological lead over its competition, including Samsung Electronics Co. Other than building chips for Qualcomm, TSMC also makes chips for Apple iPhones and currently holds 56% of the global semiconductor foundry market. TSMC tracks Moore's law more closely than others, and the company says that the new investment shows it continues to move to the next technology node every two years.


"About seven or eight years ago, many global semiconductor companies stopped pushing forward their technologies. As of today, only three companies in the world continue to move forward with advanced technologies: TSMC is one of them," TSMC chairman Morris Chang said at the ceremony.

"This facility, called Fab 18, is to start volume production of 5-nanometer [chips] in two years. I have high expectations that this will be the world’s first 5-nanometer [chip plant]," Chang said. "Next comes 3-nanometer [technology]. We are confident that we will be able to produce 3-nanometer [chips] in three to four years."

TSMC plans to use half of the space in Fab 18 to build 3-nm production lines. Fab 18 will be built in the Southern Taiwan Science Park, TSMC also has Fab 14 in the same science park, that fab builds 10nm and 16nm chips. Chang also noted that TSMC traditionally has a 15-20% ratio of return on invested capital. With those numbers, the company could recover the NT$500 billion investment in five years and generate NT$1.5 trillion in revenue over that same period. The NT$500 billion investment will also be paired with NT$200 billion in R&D spending for a total investment of NT$700 billion in 5nm process technology.