Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, has raised its long-term outlook for the global semiconductor industry, projecting the market will surpass $1.5 trillion by 2030, according to presentation materials released ahead of its annual technology symposium on Thursday. The revised forecast represents a 50% upgrade from the company's earlier estimate of $1 trillion, highlighting the accelerating impact of artificial intelligence and high-performance computing on global chip demand. As per Reuters, the company expects the market to exceed this projection, topping its previous forecast of $1 trillion. The latest forecast demonstrates how quickly the global chip supply chain is changing to meet rising AI demand, with TSMC planning aggressive expansion over the next few years including new wafer fabs and advanced packaging facilities.
TSMC expects artificial intelligence and high-performance computing applications to contribute 55% of the projected semiconductor market by the end of the decade, equivalent to roughly $825 billion. Smartphones are expected to account for 20% of the market, while automotive applications are projected to make up 10%. The company indicated that it is significantly expanding manufacturing capacity through 2025 and 2026 to meet rising demand, with plans to build nine phases of wafer fabrication plants and advanced packaging facilities in 2026 as part of its aggressive expansion strategy. According to Reuters, TSMC has been expanding capacity at a faster pace in 2025 and 2026 to meet this growing demand. Importantly, TSMC expects demand for AI accelerator wafers to rise 11 times between 2022 and 2026, with CoWoS packaging capacity growing more than 80% annually through 2027. CoWoS is a key packaging technology widely used in AI chips made by companies such as Nvidia Corp.
TSMC expects rapid growth in production capacity for its most advanced chips, including 2-nanometer and next-generation A16 technologies. The company projected a compound annual growth rate of 70% for these advanced nodes between 2026 and 2028. This aggressive expansion reflects the company's commitment to meeting the surging demand for high-performance computing applications. The growth trajectory shows how quickly the industry is moving toward advanced manufacturing capabilities to support the AI boom.
In Arizona, TSMC said its first fabrication plant is already in production, while tool installation for a second facility is scheduled for the second half of 2026. Construction of a third fab is currently underway, and the company plans to begin work this year on a fourth fab and the site's first advanced packaging facility. TSMC expects Arizona production output to increase 1.8 times year-on-year by 2026, with manufacturing yields matching those achieved in Taiwan. The company has already secured more land for future expansion and confirmed it has completed the purchase of a second large parcel of land in Arizona to support long-term growth plans. In Japan, TSMC's first fab has entered mass production for 22-nanometer and 28-nanometer chips, with the company upgrading plans for its second Japanese fab to support 3-nanometer production in response to strong customer demand. This international expansion reflects how governments and tech companies are pushing for more local chip production to reduce supply chain dependencies.
Meanwhile, in Germany, TSMC said construction of its manufacturing facility is progressing on schedule. The fab is expected to initially support 28-nanometer and 22-nanometer technologies before later expanding to 16-nanometer and 12-nanometer production capabilities. The company confirmed it has completed the purchase of a second large parcel of land in Arizona for future expansion, demonstrating its commitment to long-term global manufacturing capacity expansion. This strategic expansion across multiple geographies positions TSMC to capitalize on the global AI boom while reducing geopolitical risks through diversified manufacturing footprint.
