Pure play foundry Taiwan Semiconductor Manufacturing Corp. (TSMC) confirmed it will build a new factory in Japan to meet growing semiconductor demand and help alleviate the ongoing chip shortage.
According to Reuters, TSMC said the Japanese plant will be used for older chipmaking technology, something the company said is in severe supply shortage due to demand coming from the automotive sector.
Production of the plant is likely to begin by late 2024.
The chip shortage that is impacting much of the semiconductor supply chain began with the outbreak of COVID-19 as manufacturers had to juggle their capacity due to uncertainty in the market. The shortage started in late 2020 but has been kicked into high gear this year and is likely to continue through at least mid-2022, according to latest estimates.
C. C. Wei, CEO of TSMC, said it expects capacity to remain tight throughout 2021 and through 2022 while pricing will remain strategic, but the company won’t flex its value creation.
TSMC, along with other chipmakers and foundries such as Intel Corp., have become central in trying to resolve the chip shortage as well as to meet the upcoming demand for semiconductors, which is forecast to grow 5% over the next decade, according to the Semiconductor Industry Association (SIA).
The Taiwanese chipmaker said the expansion plan in Japan was pending approval of the company’s board and would not comment on how much the fab would cost.
The Japan fab is one of many planned fabs from TSMC as the company seeks to expand its capacity. The company will invest some $100 billion over the next three years on growing capacity.
This will include the building of a new fab in Arizona that TSMC is investing $35 billion in and just broke ground on as well as a recently announced 2 nm chip fab in Hsinchu, Taiwan. It also has plans to build a 6 nm and 7 nm chip fab in the Taiwanese city of Kaohsiung.
Currently, TSMC’s most advanced chip production is the 5 nm technology used to build mobile processors for Apple’s iPhone 12 and upcoming iPhone 13. However, TSMC also manufactures chips for Intel Corp.
Intel has its own ambitions for semiconductor manufacturing as well and wants one-third of all production to be done in the U.S. in the future. Currently, only 12% of all chips made worldwide are manufactured in the U.S. Meanwhile, the European Union is mobilizing its own plans to gear up investments with the goal to manufacture 20% of the world’s chips by 2030.
Intel is investing $20 billion in two new fabs in Arizona as well as developing its own foundry business to compete with the likes of TSMC, UMC and GlobalFoundries.