TSMC Pledges $100 Billion Over Three Years, For ‘Advanced’ Chip Making

Taiwan Semiconductor Manufacturing Company (TSMC) has pledged to investment even greater funding over the next three years, in order to meet demand.

TSMC is the world’s largest contract chipmaker, and it said on Thursday that it expects to pour $100 billion into advanced chips over the next three years to keep up with rising demand, Nikkei Asia reported.

This is on top of the the $25 billion to $28 billion that TSMC had planned to spend to make advanced chips this year.

Spending plan

In November TSMC announced that it would provide an investment of paid-in capital of $3.5 billion to set up a wholly-owned subsidiary in Arizona.

That came after the firm had announced in May 2020 that it is building a $12 billion factory in Arizona.

“We are seeing a structural and fundamental increase in underlying demand driven by key long-term growth megatrends including 5G and high-performance computing,” C.C. Wei, TSMC’s CEO said in a letter seen by Nikkei Asia.

The CEO added that Coronavirus pandemic has also transformed the global economy, changing how people work, learn and live.

Wei told clients that TSMC will also “suspend wafer price reductions starting 31 December” this year, for four quarters.

“We believe that this modest action is the least disruptive option to supply chains so that TSMC can deliver our mission of providing leading semiconductor technologies and manufacturing capability to you in a sustainable manner,” Wei reportedly said.

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TSMC’s three year spending plan will see it fund the building of ‘greenfield’ chip manufacturing facilities, as well as expanding existing fabs, according to the CEO’s letter.

Wei reportedly said his company has already started to hire thousands of staff, acquired land and equipment and started construction of facilities in multiple sites globally.

Besides the $12 billion facility in Arizona the firm is currently building, the firm is also reportedly expanding in multiple cities in Taiwan, including building its 3-nanometer chip facility, the world’s most advanced chip production technology, in the southern Taiwanese city of Tainan.

TSMC also operates two chip plants in China in Nanjing and near Shanghai.

Silicon shortage

And the head of TSMC said that his firm, alongside other chipmakers, are already trying their hardest after meeting Taiwanese government officials, to address the global silicon shortage that is hurting the car industry, as well as other sectors.

Wei reportedly said in the letter that his company’s plants have been running at 100 percent utilisation in the past 12 months and still it has not been able to catch up to the demand.

“The increased capacity will improve supply certainty and help protect complex global supply chains that rely on semiconductors,” he reportedly said. “We ask for your patience as we expedite the building of new fabs and capacity.”

Intel last month said it would spend $20 billion to build two new fabs in Arizona, in an effort to bolster production.

Intel also said it would re-enter the contract chipmaking business, to make chips for outside customers.