TSMC Earmarks $44 Billion To Expand Foundry Capacity In 2022 After A Stellar 2021 With 50% Revenues From 5nm/7nm Chips

Taiwan Semiconductor Manufacturing Company (TSMC), the semiconductor chip manufacturing behemoth that pioneered the pure-play foundry business model, announced that it will spend up to $44 billion in 2022 to expand foundry capacity.

The world's largest contact chipmaker today announced that company's revenue from January through December 2021 totaled NT$1,587.42 billion (USD 56.82 billion), representing an increase of 18.5 percent compared to the same period in 2020.

The company also clocked record revenue for the month of December 2021. TSMC's monthly revenue for December was at NT$155.38 billion (USD 5.6 billion) increase of 32.4 percent from December 2020.

“Our fourth quarter business was supported by strong demand for our industry-leading 5-nanometer technology,” said Wendell Huang, VP and Chief Financial Officer of TSMC. “Moving into first quarter 2022, we expect our business to be supported by HPC-related demand, continued recovery in the automotive segment, and a milder smartphone seasonality than in recent years.”

The company's stellar 2021 performance was driven by robust demand for gadgets such as smartphones, high-performance computing devices, the Internet of Things, and automotive electronics.

According to TSMC, its advanced 5-nanometer process, the latest technology the Taiwanese chipmaker has started mass production, accounted for 19 percent of its total sales in the year 2021, while the 7nm process made up 31 percent. 16nm process contributed 14 percent of the sales.

In the fourth quarter, shipments of 5-nanometer accounted for 23% of total wafer revenue; 7-nanometer accounted for 27%.

Advanced technologies (7nm and below) accounted for 50% of total wafer revenue, up from 41% in 2020.

In 2021, 44% of TSMC sales came from chips for smartphone and 37% from processors for high performance computing (HPC) system. The revenue from Smartphone, HPC, IoT, Automotive, DCE, and Others increased 8%, 34%, 21%, 51%, 2%, and 9% respectively from 2020.

In 2021, revenue from customers based in North America accounted for 65% of total net revenue, while revenue from Asia Pacific, China, EMEA (Europe, Middle East, and Africa), and Japan accounted for 14%, 10%, 6%, and 5% of total net revenue respectively.

Capital Expenditure Plans

While the company spend $30 billion to build additional foundry capacity in 2021, it said today that it has earmark between $40 billion and $44 billion for capital expenditure in 2022.

In 2021, TSMC announced plans to invest $100 billion over the next three years to increase production capacity as demand surged.

TSMC is currently setting up a massive state-of-the art manufacturing plant in southern Taiwan to produce 5-nanometer processor. 5-nanometer process are superior because more transistors can fit in the same sized chip, boosting power and efficiency.

In 2021, TSMC announced setting up of chip manufacturing units outside Taiwan

In Nov, TSMC announced that they will jointly build a new chip manufacturing unit in Japan and start producing chips by 2024.

TSMC-Sony joint venture will make an initial investment of $7 billion to establish the chip manufacturing plant. Construction of the chip plant is scheduled to commence in 2022

The joint venture company, to be called Japan Advanced Semiconductor Manufacturing, Inc. (“JASM”), will be set up in Kumamoto, Japan to provide foundry service with initial technology of 22/28-nanometer processes to address strong global market demand for specialty technologies. Sony will invest up to $500 million and will hold no more than a 20% stake in the joint company.

Japanese government will provide 600 billion yen ($5.2 billion) in subsidies to support the new chip manufacturing unit that will be set up by TSMC.

In 2021, TSMC commenced construction of its $12 billion fab factory in Phoenix, Phoenix, Arizona, where it will start making 5-nanometer chips in 2024. The company says it will produce 20,000 wafers each month.