TSMC will spend as much as $44 billion this year to expand capacity amid chip shortage

TSMC, the world’s largest contract chipmaker, plans to spend as much as $44 billion to expand its capacity this year as the chip shortage drags on.

In a conference call early Thursday, TSMC's finance chief Jen-Chau Huang said roughly 70% to 80% of the new spending will be allocated for advanced process manufacturing tech. The remaining amount of cash will be divided between packaging capacity and “specialty technologies” based on older manufacturing processes.

The semiconductor business is typically cyclical, swinging from periods of oversupply to shortages such as the one the world is experiencing now. But company executives said that underlying demand for chips has permanently increased.

“While the short-term imbalance may or may not persist, we continue to observe the structural increase in long-term semiconductor demand underpinned by the industry mega trend of 5G and [high performance computing]-related applications,” TSMC CEO C.C. Wei said. “We also observed the higher silicon content in many end devices, including automotive, PCs, servers, networking and smartphones.”

TSMC’s expansion plans arrive as rival Intel has told investors its own plans amount to $25 billion to $28 billion for this year. Intel has discussed plans for two new fabs in Arizona, and the expansion of its packaging facility in New Mexico.