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Continue to site >> Skip to main content * Aspencore network News & Analytics Products Design Tools About Us AspenCore Network News the global electronics community can trust eetimes.com The trusted news source for power-conscious design engineers powerelectronicsnews.com Supply chain news for the electronics industry ebnonline.com The can't-miss forum engineers and hobbyists elektroda.pl News the global electronics community can trust eetimes.com The trusted news source for power-conscious design engineers powerelectronicsnews.com Supply chain news for the electronics industry ebnonline.com The can't-miss forum engineers and hobbyists elektroda.pl News the global electronics community can trust eetimes.com AspenCore Network Product news that empowers design decisions electronicproducts.com Design engineer' search engine for electronic components datasheets.com The electronic components resource for engineers and purchasers eem.com Product news that empowers design decisions electronicproducts.com Design engineer' search engine for electronic components datasheets.com The electronic components resource for engineers and purchasers eem.com AspenCore Network The design site for hardware software, and firmware engineers embedded.com Where makers and hobbyists share projects electroschematics.com The design site for electronics engineers and engineering managers edn.com The learning center for future and novice engineers electronics-tutorials.ws The educational resource for the global engineering community techonline.com The design site for hardware software, and firmware engineers embedded.com Where makers and hobbyists share projects electroschematics.com The design site for electronics engineers and engineering managers edn.com The learning center for future and novice engineers electronics-tutorials.ws AspenCore Network Where electronics engineers discover the latest toolsThe design site for hardware software, and firmware engineers eeweb.com Circuit simulation made easy partsim.com Brings you all the tools to tackle projects big and small - combining real-world components with online collaboration schematics.com Hardware design made easy pcbweb.com A free online environment where users can create, edit, and share electrical schematics, or convert between popular file formats like Eagle, Altium, and OrCAD. schematics.io Find the IoT board you’ve been searching for using this interactive solution space to help you visualize the product selection process and showcase important trade-off decisions. transim.com/iot Transform your product pages with embeddable schematic, simulation, and 3D content modules while providing interactive user experiences for your customers. transim.com/Products/Engage Where electronics engineers discover the latest toolsThe design site for hardware software, and firmware engineers eeweb.com Circuit simulation made easy partsim.com Brings you all the tools to tackle projects big and small - combining real-world components with online collaboration schematics.com AspenCore Network A worldwide innovation hub servicing component manufacturers and distributors with unique marketing solutions aspencore.com SiliconExpert provides engineers with the data and insight they need to remove risk from the supply chain. siliconexpert.com Transim powers many of the tools engineers use every day on manufacturers' websites and can develop solutions for any company. transim.com A worldwide innovation hub servicing component manufacturers and distributors with unique marketing solutions aspencore.com SiliconExpert provides engineers with the data and insight they need to remove risk from the supply chain. siliconexpert.com Transim powers many of the tools engineers use every day on manufacturers' websites and can develop solutions for any company. transim.com * About Us * * * My Cart 0 Subscribe Login/Register Input your search keywords and press Enter. * Home * News News & Analysis Biden, Intel Unveil Ohio Fab, Tout Chip Legislation By Alan Patterson 01.21.2022 News & Analysis Ray Stata to step down as chair of Analog Devices By Stefani Munoz 01.20.2022 News & Analysis Post-Fire, ASML Expects 20 Percent Sales Growth in 2022 By Alan Patterson 01.20.2022 News & Analysis AI expands HBM footprint By Gary Hilson 01.20.2022 Read More * PERSPECTIVES * Designlines * Military & Aerospace * AI & Big Data * Analog * Automotive * Embedded * Industrial Control & Automation * IoT * MCU * Medical * Memory * PCB * Power Management * Programmable Logic * Prototyping * SoC * Test & Measurement * Wireless & Networking * PODCAST * Education * EETimes University * Tech Papers * Courses * Fundamentals * Webinars * Store * Special Projects * IOT Times * Asia Watch Input your search keywords and press Enter. 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(TSMC) once again plans a boost in capital expenditures. This new round calls for as much as $44 billion in 2022 to meet demand the company believes could grow by up to 20 percent during the next few years. Chips used in high-performance computing (HPC) and smartphones, each accounting for about 40 percent of revenue during the fourth quarter of 2021, are driving demand for the world’s largest foundry. All application segments for which TSMC provides information, including automotive and IoT, posted growth during the period. “We expect our capacity to remain tight throughout 2022,” TSMC CEO C.C. Wei said on a Jan. 13 conference call to announce quarterly results. “In 2022, we expect the supply chain to maintain a higher level of inventory as compared to the historical level, given the continued need to ensure supply security.” Chip shortages that emerged around the same time as the Covid pandemic nearly two years ago are likely to persist this year as large populations stay at home to work and play games online. That trend has continued to crimp growth for car makers and other electronics manufacturers worldwide who failed to see the chip crunch coming. TSMC aims to increase its 2022 capital expenditure by as much as 50 percent from $30 billion in 2021. At the same time, TSMC bumped up its expectation for gross margins over the next few years to 53 percent from the previous 50 percent. Source: TSMC. (Click on the image for a larger view) TSMC is not just expanding capacity for advanced nodes like 5 nm and 3 nm, where its sole rival (at least for now) is Samsung. TSMC will increase legacy 28-nm production, where it competes with a range of other foundries such as Semiconductor Manufacturing International Corp. (SMIC) of China, United Microelectronics Corp. (UMC) of Taiwan, and GlobalFoundries, which has headquarters in the US. “Mature nodes have more competition, but successive price hikes from weaker foundries have made TSMC better but cheaper again, and hence made TSMC the last supplier for customers to cut orders if the cycle turns,” Bernstein analyst Mark Li said in a report provided to EE Times. TSMC’s strategy at mature nodes is to work closely with customers to develop specialty technologies, according to Wei. Industry trends like 5G, HPC and increased silicon content in electronic devices will drive demand, he said. “We forecast 28 nm will be the sweet spot for our embedded memory applications. In support of our special technology strategies, we are expanding our 28-nm manufacturing capacity at sites in China, Japan and Taiwan.” Growth pains Still, some are concerned that a rapid buildup of capacity by TSMC and foundry rivals like Samsung and Intel may soon result in widespread overcapacity and plunging profits. “A lot of the financial industry, we’re talking about some type of cycle peak or oversupply in 2022,” Goldman Sachs analyst Bruce Lu said on the conference call. Even if there is a downturn in the making, it should not be very volatile for TSMC, according to Wei. To hedge against a potential downturn, the company has been taking pre-payments from customers that range from Apple to Xilinx who want to secure chip supplies. In the past, some TSMC customers double-booked orders during supply shortages. Those inflated figures provided a rosy outlook that was out of line with reality. In 2021, TSMC received $6.7 billion as pre-payments, and the company expects that number to increase this year. Pre-payment is tempting, but it undermines the principle of the foundry model, said Bernstein analyst Li, once himself a TSMC engineer. TSMC’s pre-payments are less than 10 percent of its annual revenue, he noted. “Taking pre-payments deviates from the principle of ‘everyone’s foundry’ and poses a risk to the critical scale, diversity and efficiency advantage of the foundry model,” he said in the Bernstein report. Expanding abroad Some of TSMC’s increase in capital expenditures this year will go to new chip facilities in Japan and the United States. The company didn’t disclose how much of its $40 billion-plus budget for 2022 is earmarked for those projects. The Japan facility, a joint venture with Sony and the Japanese government, is likely an exception. TSMC is still evaluating the possibility of building a branch foundry in Europe. “We haven’t done a joint venture for many years, and we think this joint venture is a also a special case,” TSMC Chairman Mark Liu said. “Typically, every TSMC fab, no matter where it’s located, will serve customers from around the world. This Japan joint venture is also the same. However, in Japan, we have a very large customer who has a single technology.” Liu didn’t disclose details on the Sony technology. Concerns of a downturn were repeated by analysts on the conference call. The advanced nodes where TSMC and Samsung have carved out a niche for themselves may provide resilience against a chip slump. “There is a cyclical risk, but highlight the risk is much lower than others. In the fourth quarter of 2021, half of (TSMC’s) revenue was from 7 nm and 5 nm, where competition is limited,” Bernstein’s Li said. “With 4 nm ramping, this portion will become more to protect TSMC from the cycle.” SHARE THIS: * Twitter * Facebook * LinkedIn * Alan Patterson Alan has worked as an electronics journalist in Asia for most of his career. In addition to EE Times, he has been a reporter and an editor for Bloomberg News and Dow Jones Newswires. He has lived for more than 30 years in Hong Kong and Taipei and has covered tech companies in the greater China region during that time. 0 comments Post Comment LEAVE A REPLY CANCEL REPLY You must Register or Login to post a comment. This site uses Akismet to reduce spam. Learn how your comment data is processed. Podcast Podcasts 57:44 High-Tech Scam Artists: Counterfeit ICs By Brian Santo 01.21.2022 On the Weekly Briefing podcast: Military contractors have been bedeviled by counterfeit ICs for decades, but with supply chains in shambles and so many parts in short supply, the problem is becoming endemic. What is a “counterfeit” IC, how big is the problem, and how can companies guard against being bamboozled? With cybersecurity expert Domenic Forte of the University of Florida and Barb Jorgensen, editor of EPS News. 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