Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said that it plans to roughly double its capacity expansion over the next three years to cope with rapidly growing demand for chips used in high-performance computing (HPC) applications and electronic devices.
The COVID-19 pandemic accelerated a global digital transformation as lockdowns led to a surge in demand for PCs and other devices that connect to the Internet, the Hsinchu-based chipmaker said.
Chip demand also rose due to increased usage of contactless payment tools and the growing popularity of electric vehicles, it said.
“We started speeding up our capacity expansion at the beginning of last year, but the semiconductor supply chain was still unable to catch up ... with demand growth,” TSMC senior vice president Y.P. Chin (秦永沛) told a semiconductor forum organized by National Cheng Kung University in Tainan.
Since then, a global semiconductor supply crunch has shown no signs of alleviating, Chin said, adding that supply constraints have been even worse lately because of component disruptions.
However, the supply chain disruption is just a short-term phenomenon, he said.
The key issue is how to cope with the voracious demand for chips used in HPC-related applications and electronic devices, with the trend fueled by digital transformation, he said.
TSMC said it expects the global semiconductor industry to show compound annual growth of more than 10 percent from this year to 2025, outpacing growth of 7 percent in the five years to last year and 3 percent from 2000 to 2015.
To seize this opportunity, TSMC is approximately doubling the pace of its capacity expansion from this year to 2023, compared with the three years to last year, Chin said.
The rapid expansion could widen the lead it has over its closest foundry competitor, Chin said, adding that TSMC’s total capacity last year was about three times greater than its rival’s foundry capacity.
TSMC on Tuesday unveiled new capacity expansion plans in Taiwan and Japan.
A new fab in Japan is to produce 22-nanometer and 28-nanometer chips, while a new plant in Kaohsiung is to focus on 7-nanometer and 28-nanometer chips, the company said after its board of directors approved a capital budget of US$9.04 billion.
Construction of the two fabs is scheduled to begin next year, with mass production expected to begin in 2024.
Taiwan has an advantage over other countries and regions in helping chipmakers to build cost-effective fabs, given its sound semiconductor ecosystem and supply chains, which took the nation 30 years to foster, Chin said.
“Although many countries consider semiconductor manufacturing to be a national security issue amid geopolitical tensions, it is not easy to make chips locally,” Chin said.
The semiconductor industry is capital-intensive, technology-intensive and labor-intensive, he said, adding that it might be easy for wealthy countries to raise capital to make chips, but a semiconductor ecosystem and supply chains cannot be created overnight.
“We are very optimistic about Taiwan’s semiconductor industry for at least for the next 10 years,” he said.
TSMC founder Morris Chang (張忠謀) last week said that it would “not ... be a possible task” to rebuild semiconductor supply chains in the US due to high costs.
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