Chip industry capital expenditure is fierce! Taiwan Semiconductor and Micron make big investments

Driven by the strong demand for artificial intelligence and advanced computing, global semiconductor giants are ushering in a new wave of massive investment. Recently, there have been reports in the industry about the huge investment plans of Taiwan Semiconductor and SK Hynix in the coming years.

On the Taiwan Semiconductor side, media reports citing industry sources stated that the company's capital expenditure in 2025 is expected to reach USD 32 to 36 billion, a year-on-year increase of 12.5% to 14.3%, marking the second highest in history. This investment will mainly be used for the research and capacity expansion of the most advanced processes such as 2nm.

Meanwhile, SK Hynix of South Korea plans to invest as much as USD 74.8 billion by 2028, with 80% of the investment allocated to the research and production of High Bandwidth Memory (HBM) chips.

Strong demand for 2nm exceeds expectations, driving up Taiwan Semiconductor's capital expenditure next year

Industry sources indicate that due to the continuous ramp-up of research and development for the most advanced processes like 2nm, coupled with unexpectedly strong demand for 2nm, Taiwan Semiconductor's capital expenditure in 2025 is expected to range from USD 32 to 36 billion, marking the second highest in history with a year-on-year increase of 12.5% to 14.3%.

It is reported that Taiwan Semiconductor plans to achieve mass production of the 2nm process in 2025, with the mass production curve expected to be similar to that of 3nm.

Previously, it was reported that in order to meet the mass production requirements of Taiwan Semiconductor's 2nm process, equipment manufacturers are in full swing, especially for EUV lithography machines, with an estimated total delivery of over 60 EUV machines in the next two years, with a total investment amount exceeding CNY 400 billion (approximately USD 55 billion).

On the customer side, it is worth noting that in addition to Apple being the first to reserve the initial batch of 2nm capacity, other non-Apple customers are also actively adopting this technology due to the strong demand for AI.

Taiwan Semiconductor declined to comment on these rumors and reiterated the progress of capital expenditure and 2nm technology, focusing on the content of the April analyst meeting.

At that time, Taiwan Semiconductor emphasized that capital expenditure and capacity planning are based on long-term structural market demand. Capital expenditure for 2024 is expected to range between USD 28 to 32 billion.

Reports also mentioned that Taiwan Semiconductor is expanding the capacity of advanced processes as planned:

Its 3nm factory in Tainan will enter the mass production phase in the third quarter of this year, and the P8 factory next year will also gradually introduce EUV lithography machines. At the same time, the construction of the 2nm factory in Baoshan, Hsinchu will maintain strong momentum in EUV equipment procurement over the next three years, while the construction of the 2nm factory in Kaohsiung is also progressing simultaneously.

SK Hynix: Investing USD 60 billion in HBM

South Korea's SK Hynix, the world's second largest memory chip manufacturer, has announced ambitious investment plans.

On Sunday, SK Hynix announced that it plans to invest as much as KRW 103 trillion (approximately USD 74.8 billion) by 2028, with 80% (approximately USD 60 billion) allocated to the research and production of HBM chips SK Hynix has always been in a leading position in the HBM technology field. In March of this year, SK Hynix began mass producing HBM3E chips, and has brought forward the mass production time of the next generation HBM4 chips to 2025.

As part of SK Hynix's bet on AI, SK Telecom and SK Broadband will also invest 3.4 trillion Korean won in the data center business to further enhance the group's AI ecosystem.

Although this is the first time SK Hynix has disclosed investment plans up to 2028, the company has already announced a series of investment plans this year, including investing $3.87 billion in Indiana, USA to build an advanced packaging plant and AI product research center, and investing $14.6 billion in South Korea to build a new memory chip complex.

Given the strong demand for AI chips, SK Hynix plans to generate 800 trillion Korean won in revenue by 2026 through operations and business reforms.

In addition, SK Hynix plans to ensure 300 trillion Korean won in free cash flow within three years to keep its debt-to-equity ratio below 100%. Despite a loss of 1 trillion Korean won last year, it is expected that this year's pre-tax profit will reach 2.2 trillion Korean won, with plans to increase this number to 4 trillion Korean won by 2026