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Is the silicon crunch set to continue?

Speaking at TSMC’s Technology Symposium Dr. C.C. Wei, the company’s CEO, talked about how the digital transformation all around us was opening up a new world of opportunities for the semiconductor industry and spoke of, “unleashing our customers’ innovations.”

Yet, only a few days earlier Intel's CEO Pat Gelsinger told the Computex trade show in Taipei that while trends caused by the pandemic had led to a "cycle of explosive growth in semiconductors" that had, in turn, placed a huge strain on the global supply chain and he warned that it could take several years for the current shortage to be resolved.

Gelsinger said that while the industry was taking steps to address near term constraints it could still take, “a couple of years for the ecosystem to address shortages of foundry capacity, substrates and components."

While Victor Peng, speaking to New Electronics, said that he didn’t expect the shortage to extend beyond 2022, it does seem increasingly possible that the current chip shortage could go on for much longer than initially expected.

Intel has already looked to produce chips within nine months to address shortages at US car plants and has also unveiled a $20 billion plan to expand its advanced chip manufacturing capacity, building two factories in Arizona and opening its plants to outside customers.

So where does that leave one of the two behemoths that currently dominate the market - TSMC?

Well, to be fair, TSMC has already started construction at a site in Arizona where it plans to spend $12 billion to build a computer chip factory.

C.C. Wei has said that the factory is on track to start volume production of chips using the company's 5-nanometer production technology starting in 2024 and, like Intel and Samsung, it’s likely it will be competing for a share of the $54 billion in subsidies for the chip industry that the US government is planning to pass into law.

TSMC plans to spend $100 billion over the next three years to increase capacity at its factories and has said that it aims to have enough manufacturing capacity to support the growth of its clients.

TSMC has taken centre-stage during this crisis and its shares have soared. Today it’s worth over $560billion, which means that it’s worth twice that of Intel.

There have certainly been some winners and losers as a result of COVID-19, but there’s no doubting that TSMC has been and will remain one of the big winners!

Author
Neil Tyler

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