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Why Apple Chip Supplier TSMC's Board Approved $2.8B Spending

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Why Apple Chip Supplier TSMC's Board Approved $2.8B Spending

Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM), a foundry that supplies chips to the likes of Apple Inc (NASDAQ: AAPL), is taking steps to alleviate the chip shortage which has come to plague companies cutting across sectors.

What Happened: At a special meeting of TSMC's board held Thursday, the board approved a $2.89 billion capital spending plan. The company said the investment will be made toward installing mature technology capacity.

The company approved in January a CapEx plan of $25 billion to $28 billion to develop advanced chips and building plant capacity.

Earlier this month, TSMC said it would allocate $100 billion over the next three years to increase production capacity.

Related Link: Apple Supplier TSMC's Q1 Profit Jumps 19% Amid Chip Shortage

Why It's Important: The automobile, as well as consumer electronics industries, are reeling from chip shortage, which has forced production shutdowns and delayed launches.

Chipmakers have stepped up to resolve this crisis. Intel Corporation (NASDAQ: INTC) announced a $20 billion investment plan to build new fabs in Arizona, as it committed to a hybrid manufacturing model.

The capacity expansion will likely help the Taiwanese foundry to take advantage of the opportunity presented by the chip crunch.

Related Link: 4 Intel Analysts On 'Unleashed' Event, The Risks Of Chipmaker's Foundry Plans

(Photo: TSMC)

 

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