TSMC to Invest Up to $44 Billion in 2022 to Beef Up Chip Production

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From cars to data centers, strong demand for semiconductors will help TSMC grow, says CEO

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A pandemic-fueled increase in demand for various devices requiring semiconductors has created widespread shortages, with major chipmakers on an investment spree to increase production capacity.

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TSMC, Samsung Electronics Co.

and intel Corporation

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According to an estimate by research firm Gartner Inc., three of the world’s largest chip makers — nearly three-fifths of the $146 billion that semiconductor companies around the world will spend — in 2021 to build new production capacity and develop new technologies. had to spend.

TSMC Chief Executive CC Wei said in the quarterly earnings call on Thursday that demand from sectors such as high-performance computing devices and automotive will drive the company’s manufacturing capacity utilization at a higher rate.

Mr Wei said the demand for TSMC’s chips will continue to grow as more semiconductors are used in different products or sites, such as cars or data centers. “In many devices, it is increasingly silicon content that is a more important factor in supporting the strong semiconductor demand,” he said.

He added that TSMC’s revenue this year is likely to increase by at least 25% as compared to a year ago. That would outperform TSMC’s forecast average growth pace of about 20% for the contract-chip-making industry, known as foundry, he said.

About half of the company’s chip sales come from advanced technology semiconductors it manufactures for its customers, which includes Apple. Inc.

TSMC is now increasing investment in its ability to manufacture less-advanced chips based on older production techniques. Those chips, which are widely used in cars, smartphones and other devices, became a supply chain bottleneck last year, including by Apple.

Mr. Wei called such products a “sweet spot” for the company’s long-term strategy. Industry experts say the production lines for these less-advanced chips are not as expensive, while TSMC’s technology for making these chips is typical, making it difficult for rivals to replace those semiconductors.

TSMC said revenue from its automotive-related operations, which grew 51% last year compared to a year ago, is expected to be one of its fastest-growing businesses this year. The auto sector is the worst hit by the global chip crisis.

TSMC increased its auto chip production by about 60% in 2021, but it still accounts for only 4% of its annual revenue. About 44% of its revenue comes from the smartphone business.

Some analysts have raised concerns over potential higher capacity for less advanced chips, but Mr. Wei said he is confident the company can survive this given strong demand for its semiconductors.

Taiwan-based TSMC is building a new $12 billion plant in Hsinchu Phoenix and a $7 billion plant in southern Japan. It has also said that it plans to expand capacity in the eastern Chinese city of Nanjing as well as in Taiwan. The company is currently assessing the feasibility of a new manufacturing plant in Europe, President Mark Liu said on the call.

Rivals are also expanding capacity aggressively. Samsung Electronics announced a $17 billion investment in Taylor, Texas, in November, while Intel recently pledged to build new chip-making facilities in Europe worth up to $95 billion.

In 2021, TSMC posted record revenue of 1.59 trillion New Taiwan dollars, the equivalent of $57 billion, an 18.5% increase from a year earlier. Its fourth-quarter net profit rose 16.4% from the same period a year ago, driven by strong demand for 5G applications, high-performance computing devices and automotive electronics.

For January-March, TSMC said it expected to post revenue between US$16.6 billion and US$17.2 billion, up 28% to 33% from the same period a year ago.

Write Yang Jie at [email protected]

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