The world’s largest contract foundry is having a problem that most companies would love to have; business is too good. Much of the hike in business is due to the heavy demand for 5nm chips. These chips have a larger transistor density and transistor count making them more powerful and energy-efficient than older and less cutting-edge chips. TSMC has been manufacturing 5nm chips for Apple, Qualcomm, MediaTek and AMD. Up until the middle of last September, it also shipped 5nm chips to Huawei which was TSMC’s second largest customer after Apple.
However, a change made by the U.S. Commerce Department to an export rule requires that any foundry obtain a license in order to ship to Huawei a chip that was made using American technology. Despite losing all of this business, TSMC found orders to replace the ones from Huawei that had to be canceled. The foundry is booked solid as a semiconductor shortage has impacted the auto industry. So with its overall demand intact, AsiaTimes reports that TSMC is sending over 1,000 engineers to its facilities in Tainan’s Southern Taiwan Science Park to hike production. With these extra employees on hand, TSMC will raise its 5nm capacity from 60,000-70,000 wafers per month to 120,000 wafers per month.
The facilities in Tainan make16nm and 10nm chips at Fab 14 while Fab 18 is responsible for 5nm chips. And this city will also host the fab that will build TSMC’s 3nm chips. This will be the most advanced process node replacing the 5nm components starting in the second half of 2022. Just as the phones in the iPhone 12 series were the first to use a 5nm chipset with the A14 Bionic, 2022’s iPhone 14 line could be the first smartphones powered by a 3nm chip.
TSMC could see its capital spending soar 60% this year to a range of $25-28 billion. The company has seen its market capitalization rise 70% over the last year to $560.7 billion. Thanks to the launch of the 5G iPhone 12 series, TSMC had a strong fourth quarter last year. Revenue during the October-December period rose 22% to hit a company record of $12.68 billion. Net income rose 23% to $5.1 billion during the period.
TSMC is planning to come to America with work beginning this year on an advanced semiconductor fab. Production is expected to begin in 2024.