Taiwanese technology giant TSMC says it has begun mass production of its most advanced semiconductor chips, a major milestone for the global tech industry as demand surges for artificial intelligence computing power.
More than half of the world’s semiconductors, and nearly all of the most advanced chips used in AI systems, are made in Taiwan.
TSMC, the world’s largest contract chipmaker, said its new two-nanometre chips had entered volume production as planned. The company counts some of the world’s biggest technology firms, including Nvidia and Apple, among its customers.
“TSMC’s 2nm (N2) technology has started volume production in 4Q25 as planned,” the company said in an undated statement published on its website.
The firm described the chips as the most advanced currently available, citing gains in both processing power and energy efficiency.
“The chips will be the ‘most advanced technology in the semiconductor industry in terms of both density and energy efficiency’,” TSMC said.
“N2 technology, with leading nanosheet transistor structure, will deliver full-node performance and power benefits to address the increasing need for energy-efficient computing.”
Production will take place at two facilities in Taiwan: the company’s Fab 20 plant in Hsinchu, in the north of the island, and Fab 22 in the southern port city of Kaohsiung.
TSMC has been one of the biggest beneficiaries of the global boom in artificial intelligence, as technology companies pour billions of dollars into chips, servers and data centres needed to run increasingly powerful AI models.
Global spending linked to AI is accelerating rapidly. Research firm Gartner estimates that AI-related investment will reach about $1.5 trillion by 2025 and exceed $2 trillion in 2026, approaching two percent of global economic output.
Taiwan’s central role in semiconductor manufacturing has long been described as a “silicon shield” – a strategic advantage that raises the cost of any military action against the island, which China claims as part of its territory.
However, concerns about a potential conflict have intensified fears over supply chain disruptions and prompted governments and companies to push for more chip production outside Taiwan.
This week, China conducted large-scale military drills around the island, with fighter jets and warships simulating a blockade of key ports and attacks on maritime targets.
Taiwan’s government condemned the exercises as “highly provocative and reckless”, saying the manoeuvres failed to impose any blockade.
In response to geopolitical risks and growing global demand, TSMC has expanded its overseas footprint, investing in new chip fabrication plants in the United States, Japan and Germany.
Semiconductors are now regarded as critical infrastructure, underpinning everything from smartphones and electric vehicles to advanced weapons systems and artificial intelligence.
But despite the overseas expansion, Taiwan has signalled it intends to retain its lead in the most advanced chipmaking technologies.
In an interview with AFP this month, Taiwanese Deputy Foreign Minister Francois Chih-chung Wu said the island planned to keep making the “most” advanced semiconductors at home.
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