Processors

TSMC to increase capital spending to $40 billion this year

14 January 2022

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest pure-play semiconductor foundry, said it will spend at least a third more on chip expansion in 2022 than it did last year.

In a report from Reuters, TSMC will increase capital spending to between $40 billion and $44 billion this year. The foundry spent about $30 billion in 2021.

Busy 2021

It was a busy year in 2021 for TSMC, which broke ground on its new cutting-edge semiconductor fab at its site in Arizona, where it is initially spending $12 billion. But this figure could rise to $35 billion depending on demand.

The foundry also made development plans to build a $7 billion chip fab in Kumamoto, Japan, with Sony Semiconductor Solutions taking a minority stake in the facility. TSMC also entered into talks with the German government to build a fab in a yet to be determined location.

The company also made plans to expand its presence in Taiwan with a new 6 nm and 7 nm fab in Koahsiung, Taiwan, as well as a 2 nm facility in Hsinchu, Taiwan.

Demand rising

According to Semiconductor Industry Association (SIA), demand for semiconductors is expected to rise about 5% over the next decade as these chips find their way into more applications and emerging technologies proliferate such as 5G telecommunications, artificial intelligence and internet of things.

C. C. Wei, CEO of TSMC, said in a recent financial briefing the company was entering into a period of high structural growth and strong chip demand boosted by these new technologies will continue to boost TSMC’s revenue growth for the next several years.

Wei did not seem concerned about a chip oversupply coming in a few years after a prolonged chip shortage that has impacted the supply chain since late 2020 due to COVID-19. Some fear that an oversupply may follow the chip shortage as foundries and semiconductor makers are building new fabs and adding capacity to meet current demand, which is not being met.

"Even if a correction were to occur, we believe it could be less volatile for TSMC due to our technology leadership position and the structural megatrend," Wei said.

To contact the author of this article, email PBrown@globalspec.com


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