Taiwan-based TSMC, the world’s largest contract manufacturer of chips, intends to spend a whopping US$100 billion (~RM413.8 billion) over the next three years to ramp up its capacity for making semiconductors at its plants.
The company previously announced it would dedicate between US$25 billion (~RM103.4 billion) to US$28 billion (~RM115.9 billion) this year for the development and production of advanced chips, Reuters said. None of this is exactly surprising as a global chip shortage continues to strangle the tech and automotive industries, pushing semiconductor demand to historic highs.
TSMC CEO C.C. Wei wrote in a letter seen by Bloomberg that while the company’s factories have operated at over 100% utilisation over the past year, demand still is running ahead supply. He added that TSMC was constructing multiple new plants and hiring thousands of new workers as well as suspending wafer price reductions for a year from the start of 2022.
The company is also feeling some heat from Intel, which recently announced plans to build two chip factories in Arizona as well as dip its feet into the chip contract manufacturing business – currently dominated by TSMC. The American firm also plans for additional plants in the US and Europe.
TSMC’s other and more immediate rival, Samsung, is also spending big – US$116 billion (~RM480 billion) over a decade – to expand its chipmaking business.
As a backdrop to all this, the US and China are engaged in a chips arms race that may shift manufacturing centres away from their traditional base in Taiwan and South Korea. For example, SMIC, China’s largest chipmaker, is building a plant in Shenzen with some government funding.