Contract chip maker Taiwan Semiconductor Manufacturing Company (TSMC) expects chip supply shortages to continue through 2022, but plans to spend $100 billion over three years to boost capacity.
TSMC said it expects semiconductor shortages to be “greatly reduced” for the automotive industry by the second quarter. The global shortage has stalled production at Ford, GM and Volkswagen.
The Financial Times reports that TSMC’s net income for January to March rose 19% year on year to NT$140bn ($5bn), while net revenues increased 17% to NT$362bn, beating analysts’ expectations. TSMC, the world’s largest contract chip maker, supplies its components to Apple for the iPhone and to Qualcomm.
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Despite resolving the auto industry’s chip shortages, the planned $100 billion investment in new fabs and capacity could mean semiconductor supplies remain constrained until 2023, according to CC Wei, TSCM’s CEO and president.
“Building a fab from a green fab start and also to install the capacity, it won’t be available until 2023. And so this year and next year, I still expect the capacity tightness will continue and probably also next year. 2023, I hope that we can offer more capacity to support our customers. And at that time, we start to see the supply chains tightness will release a little bit,” said Wei on a call with analysts.
TSMC reported that smartphones accounted for 45% of its first-quarter revenue, while high-performance computing made up 35%. Automotive only accounted for 4% of revenue, but was up 31% quarter over quarter. IoT accounts for 9%.
Earlier this year TSMC attempted to reallocate wafer capacity to car makers, but the auto industry’s shortage was compounded by the snowstorm in Texas, which caused power shortages across the state, and a fab manufacturing disruption in Japan. Samsung also scaled back chip production at its Austin facility due to power issues caused by the snowstorm.
Wei addressed questions about Intel’s plans to re-enter the foundry business with two new factories in Arizona. TSMC is also building a $12 billion plant in Arizona.
“TSMC has never been short on competition in our 30-plus-year history, yet we know how to compete,” said Wei, noting that Intel is a customer and competitor.
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US-China relations, and demands by each country for greater local capacity in chip production, is also impacting TCMC. Wei said the most important thing to customers of TSMC’s Arizona plant is technology and manufacturing.
The Trump administration was in talks with Intel and TSMC about boosting US chip manufacturing capacity after the pandemic exposed how reliant the US, including the Defense Department, was on capacity in Asia.