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TSMC Announces the Opening of a Chip Factory in Japan with Limited Capacity in 2022

TSMC announced on Thursday plans to build a new plant in Japan to meet long-term demand for chips, and said short-term supply constraints are likely to remain in 2022 amid a boom in demand during the COVID-19 pandemic.

TSMC, the world’s largest contract chip maker and a key supplier to Apple, said it will set up a chip factory in Japan that will use older chip technology, a segment currently experiencing severe supply shortages due to strong demand from sides of automakers and technology companies. But production at the plant is likely to start only by the end of 2024.

The company and Taiwan as a whole have taken center stage in efforts to resolve the global chip shortage sparked by the pandemic, which has forced automakers to cut production and hurt smartphone, laptop and home appliance makers.

“TSMC is working closely with our customers to plan our capacity and invest in advanced and specialized technology to meet their demand,” CC Wei CEO said in an online earnings briefing after the company reported higher than expected. profits in the third quarter. quarter.

He said the expansion plan in Japan is pending approval by the company’s board and declined to disclose details such as costs and capacity.

TSMC reported net income of NT $ 156.3 billion (approximately Rs 41,815) in July-September, well above the 22-analyst Refinitiv average of NT $ 149 billion (approximately Rs 39,850). This is 13.8 percent more than in the same period last year.

Advanced chips from TSMC, officially known as Taiwan Semiconductor Manufacturing Co, are used in everything from high-end smartphones like Apple’s recently introduced 5G iPhone 13 to artificial intelligence, cars and a wide range of low-cost consumer products.

Wei said TSMC’s capabilities will remain “limited” this year and throughout 2022, adding that chip prices “will remain strategic rather than opportunistic to reflect our value creation.”

“Our business in the third quarter was largely driven by strong demand across all four growth platforms,” CFO Wendell Huang said, referring to strong demand for chips, including for smartphones, cars, and the Internet of Things – consumer device connectivity concepts. … in Internet.

“In the fourth quarter of 2021, we expect our business to be supported by strong demand for our industry-leading 5nm technology.”

The company raised its 2021 revenue growth forecast to about 24 percent from an earlier forecast of more than 20 percent, citing an “industry megatrend” of high chip demand.

Wei said the company has entered a period of “higher structural growth” and has set a long-term target of “50 percent or more” for its gross profit margins.

TSMC’s revenues for the quarter rose 22.6% to $ 14.88 billion (approximately Rs 1.11615), in line with the company’s previous estimate of $ 14.6 billion (approximately Rs 1.09,530) to 14.9 billion dollars (approximately 1 rupees). 11,780 crores).

For the quarter ending in December, TSMC forecasts revenues of $ 15.4 billion (approximately Rs 1.15,531) to $ 15.7 billion (approximately Rs 1.17,780), up from $ 12.68 billion (approximately Rs 95,110). rupees) for the same period. a year earlier.

TSMC shares are up approximately 8.5% this year, bringing the company’s market value to $ 526.3 billion (approximately Rs 39.47,840 crore), more than double that of competitor and customer Intel.

On Thursday, they closed with a 0.4 percent gain, broadly in line with a 0.2 percent gain for the market as a whole.

© Thomson Reuters 2021

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