TSMC is aiming for a material jump in capital spending, with projections of about $98 billion by 2028 as it expands 2-nanometer and 1.4-nanometer production and advances advanced packaging.

For the current year, TSMC foresees capex of $60 billion to $64 billion, and from 2026 through 2028 spending is expected to exceed the 2023–2025 level as it scales to meet customer demand.

Tesla’s Terafab discussions involve TSMC potentially running the fabrication facilities, with possible expansion opportunities in Texas, though Morningstar’s forecasts do not currently include a Texas project.

CEO C.C. Wei cautioned about headwinds in consumer markets from rising component prices and macro uncertainties, but stressed that AI demand remains strong and AI chips will stay essential.

Morningstar’s long‑term view rests on persistent AI demand and capacity expansions, while noting that outcomes hinge on executing large-scale capacity increases and any Terafab-related developments.

TSMC is factoring potential constraints such as power shortages, datacenter delays, advanced packaging bottlenecks, and HBM supply into capacity planning, yet maintains that demand exceeds supply.

TSMC’s Q4 revenue guidance came in around $7 billion above prior forecasts, signaling a faster ramp‑up in new process nodes and packaging capabilities.

An expanded U.S. footprint could shorten shipping times and strengthen ties with Texas’s semiconductor ecosystem, aligning with a broader $265 billion U.S. investment commitment tied to TSMC.

Morningstar views TSMC as undervalued, with a fair value around $534 and roughly 26% upside, underpinned by robust AI demand and capacity expansion potential.

Barclays lifted its price target on TSMC to $670, signaling about 60% upside amid strong demand trends and clear visibility into customer roadmaps.

Preparations for A14 (1.4 nm) are underway, with risk production slated for 2027 and volume production in 2028, projected to become a larger business than 2 nm.

Expansion plans include around 20 leading‑edge manufacturing and advanced-packaging facilities globally over the coming years, along with capacity optimization across nodes to boost wafer output.