TSMC is ratcheting up spending by as much as 62% in an effort to meet surging demand for its advanced chips from tech and auto giants.

The world’s largest contract chipmaker plans to increase capital expenditures to US$25 to $28 billion, from $17.2 billion last year. The vast majority of the spending, or around 80%, will be invested in advanced processor technologies: 7nm, 5nm, and 3nm processes, CFO Wendell Huang said today.

The company also reported Thursday a 23% rise in quarterly profit. As the Covid-19 pandemic forces many to work from home, electronic devices that require high-end chips are in high demand.

The trend of growth is likely to continue in the first quarter of 2021. CEO C. C. Wei said there is a strong demand for high performance computing technologies and the auto market is recovering from the pandemic. The company offers chips for advanced driver-assistance systems and vehicle sensors, he added.

Since the beginning of last year, TSMC shares have grown more than 70%. Investors are expecting tech giants like Apple will continue to tap the Taiwanese firm to provide five nanometer chips for its iPhone models.

During the pandemic, a global chip shortage is putting pressure on foundries to expand their capacity of chip production. As the most advanced of all, TSMC can expect to assume a more important role in the market. Its high-end chips are used in smartphones, vehicles, and personal computers, among others.

This week, news reports revealed that Intel has been in talks with TSMC and Samsung to outsource its GPU production in order to compete with Nvidia, though still hoping to make last-minute improvements in production capabilities.

Industry experts believe TSMC is more likely to manufacture chips for Intel than Samsung, which is not only a foundry but also Intel’s competitor in chip design.

The GPU, known as DG2, will be produced on a new process. Anonymous source said it is made on an enhanced version of TSMC’s seven nanometer process and more advanced than the GeForce chips that Nvidia unveiled last autumn; Samsung produced these chips with its eight nanometer chipmaking process.

Mobileye, Intel’s self-driving subsidiary, told Reuters that it plans to continue tapping TSMC for the production of its next autonomous vehicle processor, and Qualcomm is likely to outsource chip production to the Taiwanese company again, after having Samsung make its Snapdragon 888 chips last year.

Chaney Ho, executive director at Advantech, said Taiwan is welcoming a window of opportunity that will last for two decades. “Taiwan has no reason to be pessimistic,” he added, citing the country’s market share in chip production.

All advanced chips are produced in foundries, and around two thirds of them come from Taiwan, mostly from TSMC.

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TNL Editor: Bryan Chou, Nicholas Haggerty (@thenewslensintl)

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