TSMC Brings 1nm Production at Full Gallop While Leading in Market and Above Tariff Tornado
TSMC, the number one semiconductor manufacturing foundry worldwide, is driving chip manufacturing very hard. They are ambitiously targeting commercial production of its 1 nm process technology. This ambitious feat comes as this company continues its market dominating spree, partly amidst geopolitical adversities such as tariffs.
Full-Scale Exploration of Moore's Law: Ambition of 1nm at TSMC
Undisputed leader in the foundry space, TSMC is not resting on its laurels. Reports emanating from Taiwan Economic Daily indicate the company is aggressively pursuing the development and deployment of its 1nm process node. For this, it is building a dedicated "Giga Fab," christened Fab 25, in Tainan, Taiwan. It is envisioned as a facility with six 12-inch production lines on wafers allocated to the 1 nm process node, with future nodes at 1.4 nm and 2 nm.
TSMC's 1nm process is expected to enter production around 2030. At the IEDM conference, the company disclosed its roadmap for this node. They expressed confidence in achieving "trillion transistor" integration using advanced 3D chip stacking. Incidentally, TSMC has also followed a new naming convention, referring to the 1.4nm and 1nm processes as A14 and A10, respectively—similar in style to Intel Foundry.
Morgan Stanley Bullish Despite Tariff Concerns
While TSMC is more focused on technological advancement, financial analysts are still keeping a close eye on potential geopolitical factors. Investment bank Morgan Stanley recently issued a note on TSMC's market position in light of the potential to tariff Taiwanese goods shipped to the US. This has given TSMC's stock price a recent dip. However, Morgan Stanley retains its NT$1,388 share price target, reflecting confidence in longer-term prospects.
"With the competitive advantages, TSMC will also be sure to attract most of the world's chip orders. The advantage of manufacturing processes is going to help TSMC withstand most of the impacts of tariffs." -Note of Morgan Stanley Analyst
Morgan Stanley also acknowledges that the tariffs could weaken TSMC's near-term performance and gross margins. The bank, however, focuses on TSMC's strong competitive advantages. These include leading-edge 3nm manufacturing technology and relatively stable production yields compared to its competitors. It is these, along with long-term growth from AI demand, that will help outweigh the tariff headwind.
Competitive Moat and Market Leadership
This underlines that Morgan Stanley's analysis on this highly difficult-to-penetrate semiconductor foundry business needs decades of huge investment. Building advanced manufacturing capabilities results in very significant competitive moats for the incumbents. This home-ground advantage, complemented by the technological prowess of TSMC, will continue to place it in good stead to protect its market share, even against increasing economic and political uncertainty.
The analyst also adds that US customers account for 60-70% of the revenue of TSMC. Most importantly, previous statements from TSMC have indicated a belief that it would pass along tariff burdens through to customers. This would affect pricing and demand in the technology industry but would not necessarily undermine TSMC's position.
This means that against the backdrop of potential tariff headwinds, TSMC has been relentless in pursuing technological innovation. This is best captured in the 1nm process initiative. Its market position, supported by the insight from Morgan Stanley, would imply its continued trajectory to leadership and growth in the semiconductor industry.
