Chip manufacturer Taiwan Semiconductor Manufacturing Company (TSMC), which supplies silicon for Apple, Qualcomm, and other tech giants, plans to spend as much as $44 billion to increase its manufacturing capacity in 2022, Reuters reports. In its latest earnings release, the Taiwanese firm said it expects capital spending to be between $40 and $44 billion in 2022, up from a previous record of $30 billion in 2021.
It’s not an entirely unexpected increase, given the company’s previously announced plan to spend $100 billion on expanding its manufacturing capacity through 2023. But the record sum suggests it doesn’t expect demand for chips to slow down anytime soon, despite some analyst warnings of potentials slowdowns in areas like smartphones, the Financial Times notes.
TSMC’s reasoning is that any slowdown will be made up by more product categories like cars and factory equipment starting to require high performance silicon. “We observe end-market demand may slow down in terms of units, but silicon content is increasing,” said the company’s CEO CC Wei, in comments reported by the FT.
Up from $30 billion in 2021
TSMC expects demand to remain high regardless of whether the global chip shortage continues, with Wei noting that it “may or may not persist” in 2022, Nikkei Asia reports. The company expects overall chip manufacturing industry revenue to grow 20 percent this year, but that TSMC will outperform it with revenue growth in the high-20 percent range. Its revenue grew by 25 percent last year.
TSMC expects this growth even as one of its customers, Intel, starts competing with the company’s contract chip manufacturing business under its new CEO Pat Gelsinger. Here’s Bloomberg’s Tim Culpan on why Intel is unlikely to be a direct challenger to TSMC (or its closest competitor Samsung) anytime soon:
“Intel trails both of them in technology prowess, forcing the California company into the ironic position of relying on TSMC to produce its best chips. Gelsinger is confident that he can catch up. Maybe he will, but there’s no way the firm will be able to expand capacity and economies…