TSMC is having trouble keeping up with its customers’ chip demands
New Street Research analyst Pierre Ferragu notes that the $100 billion that TSMC plans on spending over three years is double the amount it spent during the prior three years. On Thursday, the company explained its reason for doubling its spending by stating that “TSMC is working closely with our customers to address their needs in a sustainable manner.” During the beginning of this year, we told you that the foundry’s capital expenditures this year would be in the range of $25 billion-$28 billion mostly as the company gets ready to ship 3nm chips next year.
Last year, TSMC launched chips produced using the 5nm process node starting with the Apple A14 Bionic. The smaller the process node, the larger the number of transistors that can fit into a square mm which makes the components more powerful and energy-efficient. Building new lines to produce 3nm chips is a very expensive task. Just this past November, TSMC completed the plant structure for its 3nm fab at the Southern Taiwan Science Park (STSP).
Speaking of U.S. semiconductor suppliers, TSMC is building a chip factory in Arizona that will cost the firm $12 billion. The factory should be operational in 2024 with 20,000 12-inch wafers produced each month. The company’s U.S. facilities will churn out 5nm chips. The problem is that by 2024, cutting-edge chips will be made using the 3nm process node with 2nm undergoing tests. Intel’s two upcoming U.S. factories will also be built in Arizona.
Reducing the reliance of the U.S. on Asian chip manufacturers has been a goal of the last two administrations in the states. With that in mind, President Joe Biden’s $2.3 trillion infrastructure plan sets aside $50 billion for the semiconductor industry.