TSMC warns of tight chip supply through 2022, plans new plant in Japan

by Sumana Sarkar 17 Oct 2021


Global semiconductor major, TSMC announced a 22.6 percent uptick in its Q3 CY2021 revenue and raised its 2021 revenue target to 24 percent on the back of strong demand outlook. Addressing its Q3 earnings calls, the company’s management announced that announced that TSMC plans to build a new factory in Japan to meet long-term appetite for chips. For the near-term, however, it continues to see supply bottlenecks to continue into 2022 amid booming demand.

The company said it would set up a chip plant in Japan that will use older chipmaking technology, a segment currently under a severe supply shortage due to robust demand from automakers and tech companies. But production from the plant is only likely to begin by late 2024.

CC Wei, Vice Chairman and CEO of TSMC outlined that, “Our global manufacturing expansion strategy is based on customers' needs, business opportunities, operating efficiency and cost economic considerations. We have received a strong commitment to support this project from both our customers and the Japanese government. This fab will utilise 22-, 28-nanometer technology for semiconductor wafer fabrication. Fab construction is scheduled to begin in 2022 and production is targeted to begin in late 2024.”

Wei added that “Covid-19 has also fundamentally accelerated the digital transformation, making semiconductors more pervasive and essential in people's lives. To address the structural increase in the long-term market demand profile, TSMC is working closely with our customers to plan our capacity and investing in leading-edge and specialty technologies to support their demand.”

Speaking specifically on the demand outlook for semiconductors in the automotive industry and the recent crisis, Wei explained that, “The automotive supply chain actually is quite long and complex. TSMC's participation in the global automotive IC market is only about 15 percent. And we are doing our part to support our automotive customer with what they need.” He emphasised that TSMC cannot solve the entire industry's supply challenge. However, “we are actively taking the steps throughout the first half of this year to address the chip supply challenges for our automotive customer. And we also believe the wafer supply shortage is greatly reduced for our automotive customers, starting probably in third quarter. The end of OEM, probably we'll wait for a couple of quarters to see it. That's our estimate,” he added.

The company increased the revenue growth forecast for 2021 to about 24 percent compared to an earlier forecast of above 20 percent on account of an "industry megatrend" of strong chip demand. Wei said the company has entered a period of "higher structural growth" and set a long-term target of "50 percent and higher" for its gross margins.

 Advanced chips made by TSMC, or the Taiwan Semiconductor Manufacturing Co, are used across a gamut of industries from high-end smartphones cars, in products using artificial intelligence and a wide variety of lower-end consumer goods.

Tags: TSMC