Taiwan Semiconductor Manufacturing yesterday left its record capital expenditures plan unchanged for this year as robust client demand for 5-nanometer technology is expected to quickly fill a capacity hole after the US government announced restrictions against supplying Huawei.

The world’s biggest contract chipmaker had said that it planned to spend between US$15 billion and US$16 billion this year primarily to expand capacity for advanced 5-nanometer and 7-nanometer technologies, and develop 3-nanometer technology.

“It looks like we will see a hole in demand for 5-nanometer capacity this year, but I believe this hole will soon be filled,” TSMC chairman Mark Liu told a media briefing after the company’s annual shareholders’ meeting in Hsinchu.

If HiSilicon, a semiconductor arm of Huawei, cancels orders, TSMC’s other clients would make up for that lost capacity, as they have approached the company about placing orders, Liu said in response to shareholder concern that the US’ latest chip supply restrictions on foreign chipmakers might put a damper on TSMC’s revenue growth.

TSMC’s 5-nanometer technology is the most advanced technology available, and HiSilicon, Apple Inc and Advanced Micro Devices Inc are typically early adopters of the company’s most advanced technologies.

“We are not going to alter our capital spending for this year, nor are we going to revise our revenue growth outlook for this year,” Liu said.

However, he said that the chipmaker is facing challenges due to US-China trade tensions.

TSMC in April slightly trimmed its revenue growth for this year to an annual expansion of 15 to 18 percent, down from a previous forecast of more than 17 percent, as the COVID-19 pandemic dampened demand for smartphones.

The pandemic has not sidetracked the chipmaker’s upgrade to 5-nanometer and 3-nanometer technologies, Liu said.

Mass production of 3-nanometer technology would start as planned in the second half of 2022, with 4-nanometer technology, an enhanced version of 5-nanometer technology, being mass produced in 2023, Liu added.

Officials also discussed a plan to build a US$12 billion fab in Arizona, as shareholders expressed concern that the investment would weigh on profitability.

Subsidies from the US federal and state governments would be a determining factor in the final decision to build the fab, Liu said, adding that TSMC has not yet signed a formal agreement with US authorities.

“If the US [federal and state] governments are willing to cover our running costs, our profit margin will not be affected,” Liu said.

In such a case, the Arizona fab would definitely make a profit, as its gross margin would be similar to that of the corporate level of the company, he said.

TSMC said that the US subsidies are a crucial component of its plan to construct the fab, adding that it hopes subsidies would make US manufacturing costs comparable to those in Taiwan and China.

The firm’s raw material suppliers, such as chemicals and special gas companies, also plan to build production lines in Arizona, where Intel Corp and several other semiconductor firms have built a solid supply chain, Liu said.