This comes after the Taiwanese company already spent a record $30.4 billion on capital expenditures in 2021, up from $17.2 billion the year before. The latest investment, announced Thursday, occurs as the industry faces the worst chip shortage in history, which has held back vendors from shipping out laptops, smartphones, CPUs, and graphics cards.
TSMC plans on spending between $40 billion and $44 billion, mainly on the newest chip design technologies for smartphones and PC processors. “Between 70 and 80% of the capital budget will be allocated for advanced process technologies, including 2-nanometer, 3nm, 5nm, and 7nm,” CFO Wendell Huang said in an earnings call.
But despite the increased funding, TSMC still expects its chip manufacturing capacity to remain tight for this year, according to CEO C.C. Wei, who cited the high demand for silicon. “While the short-term imbalance may or may not persist, we continue to observe the structural increase in long-term semiconductor demand,” he added.
The other issue facing TSMC is “manufacturing cost challenges,” Wei said. Back in August, the company reportedly began notifying customers it was raising prices by as much as 20% to help fund new chip manufacturing capacity.
But on Thursday, Wei said his company was working to reduce the chip manufacturing costs for customers. “Our pricing strategy will remain strategic, not opportunistic, to reflect our value creation,” he added.
Much of TSMC’s capacity is expected to churn out new processors for Apple iPhones and MacBooks, along with upcoming CPUs and graphics cards for AMD.
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In addition, Intel is now tapping TSMC’s 6-nanometer node to build the company’s upcoming Arc graphics cards. At the same time, rumors have been swirling that Nvidia is using TSMC to build next-generation RTX 4000 series graphics cards slated to launch later this year.
“We see increasing need for computation as PC will be the strongest driver of TSMC’s long-term growth,” Wei added in Thursday’s earnings call.
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