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TSMC, Intel ramp up spending as semiconductor demand booms


The Taiwan Semiconductor Manufacturing Co.’s (TSMC), sign is on display at Hsinchu headquarters, Taiwan, Wednesday June 5, 2019.

Ashley Pon via Bloomberg via Getty Images| Bloomberg via Getty Images

In an attempt to satisfy growing demand, many semiconductor firms around the globe are making major investments in research and development in order to keep up with the chip shortage.

It is also the largest contract chip maker in the world. TSMCThe company has pledged to invest $100 billion in three years to increase production of cutting-edge silicon wafers that are used for making a wide range of chips.

It stated in January that its capital spending will increase by as much as 47% between 2022 and 2022. Additionally, it intends to spend $40 billion to $44 billion in 2019, up from $30 billion in last year.

Hsinchu-based chip firm Taiwanese Chips has almost $600 Billion in market value and is currently building its a $12 billion factory in PhoenixArizona. another in JapanTo increase production. It has several other fabrication plants — also known as fabs — in development.

TSMC isn’t the only chipmaker that invests billions in hi-tech factories. These tend to take between three and four years to get online.

Rival IntelLast March, it was officially announced that plans to spend $20 billion on two new chip plantsArizona. Since over 40 years, Intel has been a part of Arizona’s semiconductor industry. On Semiconductor is one of the other large chip companies with Arizona headquarters. NXP, Microchip and NXP also have Arizona offices.

SamsungSouth Korea’s largest firm, SK, did not give guidance on 2022, but it was last month. the company revealed that it spent 90%The chip business was responsible for 48.2 trillion won (2021) annual capital investment.

Gartner reports that in 2021 semiconductor companies spent $146 million on production and research. TSMC, Samsung and Intel — three of the world’s biggest chipmakers — accounted for 60% of the $146 billion.

We are able to see capital [expenditure]Nearly doubling in the 2021-2025 5-year period vs. 2016,-2020 period,” Peter Hanbury (an analyst for semiconductors at Bain) told CNBC.

This is due to two things: the complexity of the new cutting-edge technologies, which require more steps in order to make a wafer. It also comes as a result of the growing chip shortage.

Many of the other big names in semiconductors — like Nvidia, AMDPlease see the following: Qualcomm — don’t need to spend such vast amounts of money because they are “fabless,” Glenn O’Donnell, research director at analyst firm Forrester, told CNBC.

He stated, “They design and contract to TSMC to make chips.”

Continued shortages of chip

Despite all the investment, the semiconductor industry still struggles to make enough chips.

O’Donnell stated that “we just can’t produce enough chips to satisfy society’s gluttony about anything powered by semiconductors.”

You can find chips in every product, including washing machines and kettles. Numerous chips are used in many products such as cars.

There has been speculation that there would be an “chip glut” when all new fabs produce more chips. O’Donnell however disagrees.

He stated that “the human race is dependent on technology.” He stated that “Demand will increase and not diminish.” “I am actually skeptical about whether all of this investment is sufficient.”

Hanbury predicts that the recovery from chip shortage will be slow in the near term. He also believes that the shortage of one type of chips allows for more products (such as a computer) to be made.

He stated, “But this then increases the demand for all of those other chips needed to make that product.” “It’s kind of like trying to get rid of a mole.”

Hanbury doesn’t see any risk in the longer term of excess supply over the next 2 to 3 years, as it takes time to construct the chips factories recently announced.

He said that “but, we are looking for future over-supply” and added that additional facilities would likely be constructed once the governments have finalized their incentive programs.

Some lesser-known chipmakers plan to also increase their spending for the year.

Munich-headquartered InfineonThe largest European chipmaker announced Wednesday it would spend an additional 2.4 billion euros ($2.7 million) to expand its operations in order to keep up with demand.

Meanwhile, French-Italian chipmaker ST MicroLast week, the firm announced that it will double its investments to reach $3.6 billion this year in order to satisfy demand. Geneva-based company, which has the largest clientele of electric carsmaker, made $3.6 billion last year. TeslaApple spent $1.8 Billion to create the iPhone.

The investments of the chipmakers will also benefit several other companies involved in the semiconductor supply chains.

“Watch companies like ASML, Applied MaterialsPlease see the following: Air Products,” O’Donnell said. They are the key suppliers of these chipmaking plants, and they will soon enjoy their boom cycles.”