Big quote: "Given the stronger outlook for 5G deployment next year, the demand for our 7-nanometer and 5-nanometer has increased significantly in the last few months. We have, therefore, decided to raise our full year 2019 CapEx by USD 4 billion to meet this increased demand. We now expect our 2019 CapEx to be between USD 14 billion and USD 15 billion. About USD 1.5 billion of the USD 4 billion Capex increase is for 7-nanometer capacity and $2.5 billion is for 5-nanometer capacity," explains Wendell Huang, CFO of TSMC.
Just after reporting its Q3 2019 earnings, TSMC has announced it will increase capital expenditure for 2019 to $14B -- a $4B increase over previous projections for 2019. TSMC had previously anticipated a 2019 CapEx between $10B and $11B, while the company was also remaining conservative on the outlook for 5nm chips.
However, TSMC has changed course, having anticipated a strong demand for its 7nm-class nodes, as well as its upcoming 5nm node. In particular, TSMC notes that it expects the 5G deployment to be rather aggressive. As such, TSMC outlined plans in an earnings call to not only revise its CapEx spending this year, but that 2020 will also see a similar CapEx spending in order to meet demand.
For 2019, the majority of the $4B increase will go towards outfitting fabs with 5nm capacity, while $1.5B will be allocated for increasing 7nm capacity.
Being that N7+, N6, and N5 will all see extensive use of EUV on an increasing amount of layers, we can infer that the majority of TSMC's spending will account for EUV equipment, presumably from ASML. ASML recently announced its own Q3 2019 earnings, and its sales of EUV lithography equipment have never been higher.
TSMC's advanced technologies, which they define as 16nm and below, accounted for 51% of its wafer revenue in the third quarter. Specifically, TSMC's 7nm-class nodes accounted for 27% of wafer revenue, the most of any node.