‘Short-Term Imbalances’ Keep Disrupting Chip Supply Chain: TSMC

Taiwan Semiconductor Manufacturing Co. expects customers and the supply chain to “gradually” build a “higher level of inventory” at least for the rest of 2021, compared with “historical” trends, “given that the industry continually needs to ensure supply security,” said CEO C.C. Wei on a Q3 earnings call Thursday. The world’s largest foundry reported $14.88 billion in Q3 revenue, up 22.6% year over year and 12% higher sequentially than Q2.

The wafer maker expects its capacity "to remain tight in 2021 and throughout 2022,” said Wei. “TSMC is working closely with our customers to plan our capacity and is investing in leading-edge and specialty technologies to support their demand.”

The semiconductor industry remains challenged by “short-term imbalances due to interruptions in the supply chain brought on by COVID-19,” said Wei. “We also continue to observe the structural increase in long-term demand” fueled by the “industry megatrends” of 5G and high-performance computing (HPC), plus the “higher silicon content in many end devices,” he said. Q3 revenue in TSMC’s largest end-market segment, smartphones, increased 15% quarter over quarter, to reach 44% of the total. HPC, its second-largest end market, increased 9%, generating 37% of total revenue.

TSMC will expand its global manufacturing footprint by building a “specialty technology fab” in Japan, pending board approval, said Wei. The project has gotten a “strong commitment” of support from TSMC’s customers and the Japanese government, he said. Fab construction is scheduled to begin in 2022 and production is targeted to start in May 2024, he said.

“Technology development is on track” for TSMC to begin producing 3-nanometer wafers in 2022's second half, said Wei. TSMC’s “N-3" portfolio will have “complete platform support” for HPC and smartphone applications, he said. He declined comment on “my competitor’s technology road map” when asked about Intel’s stated plans to develop four process nodes through 2025, with ambitions to catch up to or overtake TSMC for top foundry share. “I can share” that TSMC’s 2-nanometer technology, with its “density and performance, will be the most competitive in 2025,” he said.