We lowered our forecast for the 2024 overall semiconductor market, excluding memory, to increase by approximately 10% year-over-year, while foundry industry growth is now forecast to be mid- to high-teens percent, both are coming off the steep inventory correction and/or base of 2023. Having said that, we continue to expect 2024 to be a healthy growth year for TSMC. Supported by our technology leadership and broader customer base, we expect that our business to grow quarter-over-quarter throughout 2024 and reaffirm our full year revenue to increase by low to mid-20% in U.S. dollar terms. Next, I will talk about the strong AI-related demand outlook. The continued surge in AI-related demand supports our already strong conviction that structural demand for energy-efficient computing is accelerating in an intelligent and connected world.
TSMC is a key enabler of AI applications. AI technology is evolving to use ever increasingly complex AI models, which needs to be supported by more powerful semiconductor hardware. No matter which approach is taken, it requires use of the most advanced semiconductor process technologies. Thus, the value of our technology position is increasing as customers rely on TSMC to provide the most advanced process and packaging technology at scale with a dependable and predictable cadence of technology offering. In summary, our technology leadership enable TSMC to win business and enables our customer to win business in their end market. Almost all the AI innovators are working with TSMC to address the insatiable AI-related demand for energy-efficient computing power.
We forecast the revenue contribution from several AI processors to more than double this year and account for low-teens percent of our total revenue in 2024. For the next 5 years, we forecast it to grow at 50% CAGR and increase to higher than 20% of our revenue by 2028. Several AI processors are narrowly defined as GPUs, AI accelerators and CPU’s performing, training and inference functions and do not include the networking edge or on-device AI. We expect several AI processors to be the strongest driver of our HPC platform growth and the largest contributor in terms of our overall incremental revenue growth in the next several years. Now let me talk about our global manufacturing footprint update. TSMC’s mission is to be the trusted technology and capacity provider of the global IC — logic IC industry for years to come.
Given the strong HPC and AI-related demand, it is strategically important for TSMC to expand our global manufacturing footprint to continue to support our U.S. customers’ growth, increase customers’ trust and expand our future growth potential. In Arizona, we have received the strong commitment and support from our U.S. customers and plan to build 3 fabs, which help to create greater economies of scale. Each of our fab in Arizona will have a clean-room area that is approximately double the size of a typical logical fab. We have made significant progress in our first fab, which has already entered engineering wafer production in April with the N4 process technology. We are well on track for volume production in first half 2025. Our second fab has been upgraded to utilize 2-nanometer technologies to support a strong AI-related demand in addition to the previously announced 3-nanometer.
We recently completed the , in which the last steel construction beam was raised into place, and volume production is scheduled to begin in 2028. We also recently announced plans to build a third fab in Arizona using 2-nanometer or more advanced technologies, with production beginning by the end of the decade. We are confident that once we begin volume production, we will be able to deliver the same level of manufacturing quality and reliability in each of our fab in Arizona as from our fab in Taiwan. In Japan, we held an opening ceremony in February in Kumamoto for our first specialty technology fab. This fab will utilize the 12/16 and the 22/28-nanometer process technologies and is on track for volume production in the fourth quarter of this year.
Together with our JV partners, we also announced a plan to build a second specialty fab in Japan with 40, 12/16 and the 6/7-nanometer process technologies to support a strategic customer for consumer, automotive, industrial and HPC-related applications. Construction is scheduled to begin in second half ’24 with production target by the end 2027. In Europe, we plan to build a specialty technology fab in Dresden, Germany, focusing on automotive and industrial applications with our JV partners where construction is scheduled to begin in fourth quarter this year. Our overseas decision are based on our customers’ need and the necessary level of government support. This is to maximize the value for our shareholders. In today’s fragmented globalization environment, cost will be higher of everyone, including TSMC, our customers, our competitors and the entire semiconductor industry.
We plan to manage and minimize the overseas cost gap by, first, pricing strategically to reflect the value of geographic flexibility; second, working closely with government to secure their support; and third, leveraging our fundamental advantage of manufacturing technology leadership and our large-scale manufacturing base, which no other manufacturer in this industry can match. Thus, even after factoring in the higher cost of overseas fab, we are confident to deliver a long-term gross margin of 53% and higher and sustainable ROE of greater than 25% that we have committed to our shareholders. At the same time, TSMC will be the most efficient and cost-effective manufacturer in the region that we operate. We are continuing to provide our customers with the most advanced technology at scale to support their growth.
Finally, I will talk about our N2 status. Our N2 technology leads our industry in addressing the insatiable need for energy-efficient computing, and almost all AI innovators are working with TSMC. We are observing a high level of customer interest and engagement at N2 and expect the number of the new tape-outs from 2-nanometer technology in its first 2 years to be higher than both 3-nanometer and 5-nanometer in their first 2 years. Our 2-nanometer technology will adopt the nanosheet transistors structure and be the most advanced semiconductor industry technology in both density and energy efficiency. N2 technology development is progressing well with device performance and yield on track or ahead of plan. N2 is on track for volume production in 2025 with a ramp profile similar to N3.
With our strategy of continuous enhancement, N2 and its derivative will further extend our technology leadership position and enable TSMC to capture the AI-related growth opportunities well into future. This concludes our key message, and thank you for your attention.
