The largest makers of semiconductors in Taiwan and China are now investing billions of dollars to ramp up the production of microchips, a critical shortage of which is slowing down the production of cars worldwide, as well as mobile phones and many other electronic devices.
Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker, has just announced a massive $100 billion investment into advanced chips over the next three years to erase the shortage and meet future demand.
In mid March, Semiconductor Manufacturing International Corporation, China's largest chipmaker, revealed its plan to build a new $2.35 billion facility in Shenzhen to help eliminate the shortage and to make China less reliant on foreign companies for semiconductors.
TSMC said the new investment is a huge increase over the $25 billion to $28 billion it planned to spend to make advanced chips this year. It said 80% of this amount would be used for advanced processing technologies.
TSMC also said it would use the investment to both keep up with demand and "increase capacity to support the manufacturing and (research and development) of advanced semiconductor technologies.
It $17 billion on advanced technologies in 2020, and its investment surge this year will see TMSC enter "another period of higher growth," said Wendell Huang, TSMC vice president, and chief financial officer.
TMSC previously said semiconductor industry megatrends like 5G and high performance computing would propel the demand for semiconductor technology over the next several years.
It pointed out the COVID-19 pandemic "accelerates the digitalization in every aspect."
SMIC's planned chipmaking foundry will be built in Shenzhen. The city government will jointly build the new foundry, according to SMIC. Government money will allow SMIC to "expand production, advance its nanotechnology service and thus achieve a higher return."
SMIC will own a 55% stake in the Shenzhen subsidiary, and the local government's investment arm will own no more than 23%.
SMIC is important to China becoming self-sufficient in semiconductors. Trade tensions with the U.S., blacklists, and sanctions have highlighted China's reliance on foreign companies for state-of-the-art chips.
Global chipmaking giants are racing to expand chip fabrication capacity to meet huge global demand as a worldwide chip shortage continues to crimp output in industries highly dependent on these devices.
Last week, Intel unveiled a plan to invest $20 billion in two new U.S. chipmaking facilities. In January, Samsung Electronics said it was spending $10 billion on a Texas factory that would produce 3 nanometer chips by 2022. TSMC intends to make 5 nanometer transistor chips at a new plant in Austin by 2024.
