The Future of Foundries? TSMC’s Wafer Foundry 2.0 Explained

Recently, TSMC announced its second-quarter results for 2024, showcasing continued growth momentum with revenues reaching NT$673.51 billion, representing a year-on-year increase of 40.1% and a sequential growth of 13.6%. In USD terms, the revenue amounted to $20.82 billion, reflecting a year-on-year growth of 32.8% and a sequential increase of 10.3%.

According to TrendForce, during the Q2 2024 earnings call, TSMC Chairman and CEO C.C. Wei introduced the “Wafer Foundry 2.0” concept, redefining the foundry industry to encompass packaging, testing, and mask manufacturing. TSMC’s CFO Wendell Huang explained that the “Wafer Foundry 2.0” concept was introduced because IDM (Integrated Device Manufacturer) companies have entered the foundry market, blurring the traditional boundaries of the industry.

Wei pointed out that under the “Wafer Foundry 2.0” definition, TSMC’s foundry market share in 2023 was 28%, and the overall industry is expected to grow by 10% in 2024, with TSMC’s market share further increasing. According to previous statistics released by TrendForce, under the traditional definition, TSMC’s wafer foundry market share was 61.7% in Q1 2024, compared to 61.2% in 2023.

Wei emphasized that strong demand for advanced process nodes from artificial intelligence (AI) and smartphones has significantly boosted the utilization rates of 3nm and 5nm capacities, making 2024 a robust year for TSMC. In the second quarter of 2024, the shipments of 3nm, 5nm, and 7nm processes accounted for 15%, 35%, and 17% of total revenue, respectively, cumulatively reaching 67% of sales, up from 65% in the previous quarter, driven primarily by 3nm process revenues.

TSMC projects its capital expenditures for the full year 2024 to be between $30 billion and $32 billion, with an expected revenue growth of 24% to 26%.