TSMC set to expand globally to meet semiconductor demand
Updated
Taiwan Semiconductor Manufacturing Company (TSMC) has announced plans to expand its global manufacturing footprint against the backdrop of a semiconductor supply chain that’s struggling to meet booming demand.
In an analyst call on Thursday, the world’s largest contract chipmaker said that its plans to build chipmaking factories in the US state of Arizona are in progress, with “phase one” volume production expected to begin in the first quarter of 2024.
The company also announced plans to expand its production capabilities in China’s Nanjing region and Taiwan.
Global semiconductor shortage
With people staying indoors during the pandemic, demand for new smartphones and laptops has surged, thus increasing the need for semiconductor chips, which form key components in electronic gadgets. The skyrocketing demand for semiconductors coupled with COVID-19 related uncertainties and restrictions has created a global semiconductor shortage.
TSMC said that companies looking to secure semiconductor supplies had caused short-term supply chain imbalances.
On Thursday, the US Federal Reserve said that an ongoing shortage of semiconductors in June had contributed to a 6.6% decrease in the production of motor vehicle and automobile parts.
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Second-quarter net revenues rise
TSMC posted second-quarter net revenues of $13.29bn, slightly above the company’s forecast of $12.9–13.2bn. Second-quarter net revenue was 28% higher than that reported a year ago.
But while revenues were up, the company’s net profit margin for the second quarter was down on last year’s percentage figure, at 36.1% compared to 38.9% in the second quarter of 2020. The second-quarter net profit margin was also 2.5% lower than in the first quarter of 2021.
A long-time Apple supplier, TSMC, said that smartphone chips contributed 42% to its net revenue over the three-month period.
“We are working closely with our customers to firm up our wafer (semiconductor) pricing to reflect the cost increases and ensure we earn a proper return,” Mark Liu, TMSC chairman, said on the analyst call.
Third-quarter forecast
The company said it expects third-quarter revenue in the range of $14.6bn to $14.9bn and believes that the third-quarter operating profit margin will increase to between 38.5% and 40.5%.
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