TSMC reports record profits and will spend $44 billion on capacity upgrades in 2022.

What just happened? The chip shortage may be bad news for consumers, but it’s not a depressing time for companies like TSMC. The chip maker today reported record quarterly profits, raised growth forecasts and announced it will spend $40 billion to $44 billion on capacity upgrades in 2022.

Unprecedented demand for components means chip makers have full orders and are struggling to keep up with demand. As a result, TSMC income rose 24.1% to $15.74 billion in the fourth quarter of 2021, while net income jumped to 166.2 billion Tajik dollars ($6.01 billion) from 142.8 billion Tajik dollars a year earlier, beating analysts’ expectations.

The company’s net income is expected to be just as healthy in the first quarter of 2022. The company forecasts first-quarter sales of $16.6 billion to $17.2 billion, at least 5% more than anticipated.

It appears that TSMC does not expect chip demand to decline in the next few years. The company says it plans to invest heavily in new factories across regions, spending between $40 billion and $44 billion to expand and upgrade facilities in 2022. Bloomberg reports the figure is $10 billion more than it spent last year and 43% higher than the $25 billion to $28 billion Intel plans to spend on chip manufacturing in 2022.

TSMC CC CEO Wei spoke at an online briefing on the profit and loss (via Reuters) that the chipmaker is entering a period of higher structural growth. The company expects a “multi-year industry megatrend” of high demand for chips to be driven by new technologies and has raised its annual growth targets to 15-20% from 10-15%. Wei added that any risk of oversupply in the coming years would be mitigated by increased demand for high-tech products such as electric vehicles.

“Even if a correction occurs, we believe it could be less volatile for TSMC due to our technology leadership and structural megatrend,” Wei said.

Chip shortages continue to affect prices and availability of GPUs, PCIe 3.0 SSD controllers, DDR5 RAM, consoles, cars, laptops, and common household appliances. It even forced Sony to increase production of the PS4 due to the fact that no one could buy the PS5.

But lately there have been positive signs. Graphics card makers including Gigabyte, Asus, MSI and ASRock are expecting more shipments this year as mining demand dwindles thanks to Ethereum’s upcoming transition from proof-of-work to proof-of-stake. What’s more, the shortage of PC materials actually started to decrease in November 2021. The chip crisis may not be for a while yet, but in the near future we should see supply and demand level off a bit.

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