TSMC announces plans to build first chip plant in Japan to fulfill demand

When it comes to chip supply, TSMC revealed plans for a new production unit in Japan on Thursday to keep up with growing demand during the current COVID-19 epidemic.

To meet the burgeoning demand from automakers and tech firms, the world’s top contract chipmaker TSMC announced it will build a factory in Japan that uses outdated chipmaking equipment. TSMC has been a significant supplier to Apple for years. However, the plant’s output won’t start until the end of 2024 at the earliest.

As a result of a global chip shortage caused by a pandemic, automakers were compelled to curtail output, which impacted producers of cellphones, laptops, and consumer electronics.

Chief Executive Officer C. C. Wei said, “TSMC is working closely with our customers to manage our capacity and invest in leading-edge and specialty technologies to satisfy their demand,” after the firm recorded higher-than-expected profits in the third quarter, during an online results briefing: He said the company’s board of directors has yet to approve the expansion plan for Japan, and he declined to provide specifics on costs and capacity.

According to Refinitiv, TSMC made a net profit of TWD 156.3 billion (approximately Rs 41,815 crores) from July to September, which was significantly higher than the average TWD 149 billion (about Rs 39,850 crores) projection of 22 analysts. In comparison to the same time last year, that was a 13.8% increase.

In addition to high-end smartphones like Apple’s freshly revealed 5G iPhone 13, TSMC’s advanced processors are used in a wide range of lower-end consumer products, including vehicles and a wide range of artificial intelligence (AI) systems. The capacity of TSMC would remain “tight” this year and throughout 2022, according to Wei. He also added that the pricing of TSMC’s chips will “remain strategic, not opportunistic to reflect our value creation.”

According to Chief Financial Officer Wendell Huang, “our third-quarter business was largely underpinned by robust demand across all four growth platforms,” alluding to high chip demand for smartphones, automobiles, and the “Internet of Things”

“We expect robust demand for our industry-leading 5-nanometer technology to sustain our business moving into the fourth quarter of 2021.”

The business increased its revenue growth projection for 2021 from over 20% to approximately 24%, citing an “industry megatrend” of high chip demand as a reason for the increase.

To achieve “50 percent and greater” gross margins, the firm has entered a time of “increased structural growth,” according to Wei.

According to the company’s previous estimates, TSMC’s revenue for the quarter was between $14.6 billion (approximately Rs. 1,09,530 crores) and $14.9 billion, rising by 22.6% to $14.88 billion (about Rs. 1,11,615 crores) (roughly Rs. 1,11,780 crores).

TSMC expects sales of $15.4 billion (approximately Rs. 1,15,531 crores) to $15.7 billion (about Rs. 1,17,780 crores) for the quarter ending in December, compared with $12.68 billion (roughly Rs. 95,110 crores) in the same period a year earlier.

According to the latest data, the market value of TSMC is $526.3 billion (approximately Rs 39,47,840 crores), more than double the market value of Intel, TSMC’s main rival.

On Thursday, they gained 0.4%, about in line with the overall market’s 0.2% gain.