Sunday, January 23, 2022

TSMC earmarks record $44 billion for chip manufacturing expansion in 2022

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Chip producer Taiwan Semiconductor Manufacturing Company (TSMC), which provides silicon for Apple, Qualcomm, and different tech giants, plans to spend as a lot as $44 billion to extend its manufacturing capability in 2022, Reuters experiences. In its newest earnings launch, the Taiwanese agency mentioned it expects capital spending to be between $40 and $44 billion in 2022, up from a earlier record of $30 billion in 2021.

It’s not a wholly sudden improve, given the corporate’s beforehand introduced plan to spend $100 billion on increasing its manufacturing capability by way of 2023. But the record sum suggests it doesn’t anticipate demand for chips to decelerate anytime quickly, regardless of some analyst warnings of potentials slowdowns in areas like smartphones, the Financial Times notes.

TSMC’s reasoning is that any slowdown will probably be made up by extra product classes like automobiles and manufacturing unit tools beginning to require excessive efficiency silicon. “We observe end-market demand may slow down in terms of units, but silicon content is increasing,” mentioned the corporate’s CEO CC Wei, in feedback reported by the FT.

TSMC expects demand to stay excessive no matter whether or not the worldwide chip scarcity continues, with Wei noting that it “may or may not persist” in 2022, Nikkei Asia experiences. The firm expects total chip manufacturing business income to develop 20 p.c this yr, however that TSMC will outperform it with income progress in the high-20 p.c vary. Its income grew by 25 p.c final yr.

TSMC expects this progress at the same time as considered one of its prospects, Intel, begins competing with the corporate’s contract chip manufacturing enterprise underneath its new CEO Pat Gelsinger. Here’s Bloomberg’s Tim Culpan on why Intel is unlikely to be a direct challenger to TSMC (or its closest competitor Samsung) anytime quickly:

“Intel trails both of them in technology prowess, forcing the California company into the ironic position of relying on TSMC to produce its best chips. Gelsinger is confident that he can catch up. Maybe he will, but there’s no way the firm will be able to expand capacity and economies of scale to the point of being financially competitive. Put another way, Intel will need to sacrifice margins to gain the volume needed to fill the fabs he too wants to build.”

Huge demand for chips, to not point out the chip scarcity, have helped solidify TSMC’s place as one of many largest and most necessary corporations in the world (in truth, Culpan notes it’s the “largest non-US, non-state-owned enterprise”). And with its bold expansion plans, which embody new vegetation in Arizona and Japan, it doesn’t seem like that is prone to change.



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