TSMC eyes expansion in U.S., Japan to meet sustained chip demand
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[July 15, 2021] By
Yimou Lee and Ben Blanchard
TAIPEI (Reuters) -Taiwan Semiconductor
Manufacturing Co Ltd (TSMC) signalled on Thursday plans to build new
factories in the United States and Japan, riding on a pandemic-led surge
in demand for chips that power smartphones, laptops and cars.
TSMC, which posted record quarterly sales and forecast higher revenue
for the current quarter, said it will expand production capacity in
China and does not rule out the possibility of a "second phase"
expansion at its $12 billion factory in the U.S. state of Arizona.
The world's largest contract chipmaker and a major Apple Inc supplier
also said it is currently reviewing a plan to set up a speciality
technology wafer fabrication plant, or fab, in Japan.
TSMC's overseas expansion plans come amid concern over the concentration
of chipmaking capability in Taiwan, which produces the majority of the
world's most advanced chips and is geographically close to political
rival China, which does not rule out the use of force to bring the
democratic island under its control.

Taiwan and TSMC have also become central in efforts to resolve a
pandemic-induced global chip shortage that has forced automakers to cut
production and hurt manufacturers of smartphones, laptops and even
appliances.
"We are expanding our global manufacturing footprint to sustain and
enhance our competitive advantages and to better serve our customers in
the new geopolitical environment," TSMC chairman Mark Liu told an
analyst call.
"While our overseas fabs are not initially able to match the costs of
our manufacturing operations in Taiwan, we will work with governments to
minimise the cost gap," Liu said.
He did not give details of its plans in America and Japan, adding the
company was working to "firm up" wafer prices to reflect cost increases.
Reuters reported in May TSMC was eyeing expansion in Arizona beyond the
one currently planned.
Liu said TSMC was also planning a capacity expansion in China's Nanjing
due to the "urgent need" of clients, using the mature 28 nanometre
semiconductor manufacturing technology.
It is scheduled to enter production next year and will eventually reach
a production of 40,000 wafers per month by mid-2023, he said.
AUTO-CHIP SHORTAGE EASING?
Revenue for April-June at TSMC, Asia's most valuable manufacturing
company, climbed 28% to a record $13.29 billion.
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The logo of Taiwan Semiconductor Manufacturing Co (TSMC) is pictured
at its headquarters, in Hsinchu, Taiwan, January 19, 2021.
REUTERS/Ann Wang

For the quarter ending in September, TSMC forecast revenue of $14.6 billion to
$14.9 billion, compared with $12.1 billion in the same period a year earlier.
TSMC said the auto chip shortage will gradually reduce for its customers from
this quarter but expects overall semiconductor capacity tightness to extend
possibly into next year.
The Taiwanese firm, which also makes chips for Qualcomm Inc, had previously
flagged a $100 billion expansion plan over the next three years, as
fifth-generation telecommunications (5G) technology and artificial intelligence
applications drive global demand for advanced chips.
"Moving into the third quarter, we expect our business to be supported by strong
demand for our industry-leading 5 nanometre and 7 nanometre technologies, driven
by all four growth platforms, which are smartphone, HPC, IoT and
automotive-related applications," Chief Financial Officer Wendell Huang said.
Analysts are bullish about TSMC's business in the coming quarters, citing strong
demand for the company's most advanced 5 nanometre node technology as well as
its upcoming 3 nanometre node, which is scheduled to enter trial production
later this year.
For the second quarter, TSMC said profit rose 11% to T$134.4 billion ($4.81
billion) from a year earlier, just short of an average estimate of T$136.5
billion, drawn from 19 analysts by Refinitiv.
Shares of TSMC, the eleventh most valuable listed company in the world, have
gained about 16% so far this year, giving it a market value of $567 billion,
more than double that of chipmaker Intel Corp.

TSMC's stock closed up 0.16% on Thursday, compared with a 1.1% gain for the
benchmark index.
($1 = 27.9320 Taiwan dollars)
(Reporting By Yimou Lee and Ben Blanchard; Editing by Sayantani Ghosh and
Muralikumar Anantharaman)
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