TSMC says chip shortage could last until 2022

The world’s biggest contract chipmaker said it is expanding capacity and working to keep pricing reasonable

Taiwan Semiconductor Manufacturing (TSMC) said it is doing its best to increase productivity and ease a worldwide chip shortage, but that supply shortages are likely to continue into 2022.

The world’s biggest contract chipmaker said it is expanding capacity and working to keep pricing reasonable.

“We have acquired land and equipment, and started the construction of new facilities. We are hiring thousands of employees and expanding our capacity at multiple sites,” chief executive officer C.C. Wei said.

It comes as TSMC reported a 19.4 per cent rise in first-quarter profit, beating market expectations, on strong chip demand as more people shift to working from home.

TSMC, whose clients include Apple and Qualcomm, had already flagged “multiple years of growth opportunities” as the Covid-19 pandemic increased demand for advanced chips to power smartphones and laptops.

TSMC’s net profit for January-March hit T$139.7bn ($4.93bn, £3.5bn, €4.1bn), versus the T$134.01bn average of analyst estimates by Refinitiv.

Revenue rose 25.4 per cent to a record $12.92bn, in line with the company’s earlier estimated range of $12.7bn to $13bn.

The firm forecast that second-quarter revenue would be in a range of $12.9bn to $13.2bn, up from $10.38bn in the same period a year earlier. It also rose its revenue growth forecast for the year to about 20 per cent, versus an earlier forecast of a mid-teens percentage.

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TSMC also has huge expansion plans as it business has been boosted by the chip shortage that at first forced automakers to cut production but is now also impacting makers of smartphones, laptops and appliances.

Last month it announced plans to invest $100bn over the next three years to increase capacity at its plants, days after Intel Corp announced a $20bn plan to expand its advanced chip making capacity.

The company also increased capital spending on the production and development of advanced chips to about $30bn this year, up from a range of $25bn to $28bn it said in January.

TSMC shares have risen about 16 per cent this year and have more than doubled over the past year, giving it a market value of $558bn, more than twice that of Intel’s and higher than the value of South Korean technology giant Samsung Electronics.

Its stock rose 1.14 per cent on Thursday, compared with 1.25 per cent for the benchmark index.

FURTHER READING: Foxconn sees fall in profit and warns of ‘material shortages’

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