The TSMC reports the global chip crunch may be easy

Road manufacturers can expect a strong recovery in chip supplies in the coming weeks, the Taiwan Semiconductor Manufacturing Company (TSMC) said, noting that a global shortage may be passing from its most paralyzing stage.

In the first six months of 2021, TSMC has increased its production of microcontroller units, an important component used for car electronics, by 30 percent compared to the same period last year, the world’s largest contract maker said investors a earnings call Thursday. MCU production is projected to be 60 percent higher for the entire year than in 2020, he added.

“By taking such actions, we expect the shortfall to be greatly reduced for TSMC customers starting this quarter,” said CC Wei, CEO of TSMC.

TSMC’s announcement follows more than nine months of severe chip shortages, which have disrupted global automobile production. U crisis it began after automakers took chip orders for last fall, which left them without supplies when demand grew just weeks later.

Analysts have recently raised their prospects for automotive chip supplies

IHS Markit said in a note in late June that it expected the outage to return in the third quarter. “We expect an improvement over the first or second quarter because the situation is better understood and great efforts are being made to improve visibility in a very complex supply chain,” he wrote. “We see evidence of this in some of the more relaxed announcements coming from General Motors that are resuming operations ahead of the planned launch and Toyota continued commitment to their planning. ”

JPMorgan analysts have estimated that production cuts by global carmakers in relation to the lack of semiconductors fell to 399,000 vehicles in the third quarter compared to 1.9m during the second quarter.

In a move aimed at further increasing confidence in security of supply in the longer term, TSMC said it was ready to continue investing in mature production technology, which is based primarily on auto chip supplies. .

“Our most recent strategy in mature nodes is to work more closely with our customers to create specialty solutions; we expect this structural demand to continue,” said Mark Liu, president of TSMC. “We will focus our investment on specialty.” For greenfield expansion manufacturing, we don’t rule it out, as long as demand can justify it. ”

United Microelectronics Corporation (UMC), TSMC’s smallest Taiwanese rival, earlier this year announced a significant expansion of its manufacturing capacity to 28 nanometers, one of the most important nodes for car chip production.

TSMC’s willingness to reinvest in older technologies, a departure from its past practice, is part of a broader strategic adjustment. Liu also announced that the company is ready to invest in more new manufacturing plants, or fabs, in countries other than Taiwan.

“There are a number of projects that are still in the pipeline,” Liu said, adding that investment in one of those will come in the $ 100 billion in capital expenditures that TSMC has earmarked for the next three years.

The company said it would not rule out expanding its manufacturing base in Arizona beyond the $ 12 billion plant due to begin production in 2024. TSMC also announced that it was doing due diligence on a proposal to build a specialty semiconductor factory in Japan, a country it had previously considered solely for research and development.

Liu said that while TSMC will continue its policy of starting state-of-the-art technology production in Taiwan and maintaining R&D there, the need for semiconductor infrastructure security has made a more diverse manufacturing footprint needed “to support and valuing our competitive advantage and better serving our customers in the new geopolitical environment ”.

TSMC on Thursday reported net profit of NT $ 134.4 billion ($ 4.82 billion) for the second quarter, up 11.2 percent year-over-year. Revenues are expected to increase from 21 to 23 percent in the third quarter, a slight acceleration from the second quarter.

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