Taiwan Semiconductor Manufacturing Co. via Yahoo Finance / Bloomberg today said it would invest $100 billion over the next three years in new manufacturing capacities as well as research and development (R&D). The investments in advanced fabs will increase TSMC's lead over rivals and will ensure that the company introduces new fabrication technologies in a predictable cadence.
"TSMC is entering a period of higher growth as the multiyear megatrends of 5G and HPC are expected to fuel strong demand for our semiconductor technologies in the next several years," a statement by TSMC reads. "In addition, the COVID-19 pandemic also accelerates digitalization in every aspect. In order to keep up with demand, TSMC expects to invest $100 billion over the next three years to increase capacity to support the manufacturing and R&D of advanced semiconductor technologies. TSMC is working closely with our customers to address their needs in a sustainable manner."
Earlier this year TSMC announced plans to radically increase its capital expenditure (CapEx) budget to $25 ~ $28 billion, an increase of 45% ~ 62% year-over-year from $17.2 billion in 2020. Last year the company spent about $3.72 billion on R&D, or about 8.2% of its revenue.
Gradual increases of R&D and CapEx budgets at leading makers of semiconductors are generally in line with expectations. New process technologies are getting more expensive to develop, whereas new fabs are getting larger and more expensive to build. For example, a 3nm/5nm-capable fab costs around $20 billion. Therefore, announcing a three-year $100 billion investment plan is not particularly surprising for TSMC as in the coming years it will have to build a 2nm-capable fab (or two).
TSMC says that demand for chips is so high that it has been running its fabs at full load for about a year and supply is still falling short of the increased demand, which is why it needs additional fabs and new employees. To support its capacity expansion, the company intends to suspend wafer price cuts for a year from the start of 2022, reports Bloomberg citing a letter from TSMC's CEO to the company’s clients.
Meanwhile TSMC is announcing its intention to pour in $100 billion in chip development and manufacturing just a week after Intel outlined its Integrated Device Manufacturing 2.0 plan under which the largest CPU maker in the world plans to become a competitor for TSMC. So far, Intel has announced plans to spend $20 billion on two production facilities in Arizona and said it would invest in expansion of chip manufacturing in other parts of the world.