TSMC builds new chip factory in Japan, warns of ‘tight’ supply until 2022

TSMC announced plans to expand its chipmaking efforts with a new plant in Japan during its third quarter 2021 earnings call, marking the latest expansion of what is already the world’s largest chipmaker, via Reuters. But the news comes as the company also warns that supply will be “tight” for chips throughout 2022 due to the current shortage.

The new plant is expected to focus on producing chips with older technology, instead of the advanced processors TSMC is best known for supplying companies like Apple, AMD, Nvidia and Qualcomm. This is especially important, given that it’s those older chips – like the ones found in cars to control airbags and seat belts or an iPhone’s power management chip – that have the biggest supply problems.

But it will still take some time before the new plant is on line, with production not due to start before “end of 2024”. TSMC is also in the process of finalizing plans for the new plant, with CEO CC Wei noting during the company’s earnings call that the new Japanese plant still needs approval from TSMC’s board of directors.

TSMC had already warned in April that the shortages could last until 2022. Wei then noted, “In 2023, I hope we can offer more capacity to support our customers. At that point, we’ll start to see the tightness in the supply chain loosen a bit. Intel CEO Pat Gelsinger also echoed concerns over supply in 2022, telling the BBC in July that it would take “a year or two” before the shortages were over. And while AMD CEO Lisa Su was more optimistic when speaking at the Code 2021 conference, she also noted that the offer for at least the first half of the year will be “likely tight. “.

TSMC is also reportedly increasing the prices of its semiconductor products by around 10% for its advanced chips and around 20% for its less advanced products (the kind of chips the new Japanese factory is supposed to help increase supply) to try to both reduce demand and help finance its planned investments.

And investing to expand its ability to meet this growing demand – and help prevent future shortages – is a key priority for TSMC. The company has already announced plans to invest $ 100 billion through 2023 to increase its manufacturing capacity, which includes its planned $ 12 billion manufacturing center in Arizona and the new Japanese plant.

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