Apple Supplier TSMC Eyes 'Second Phase' Expansion In US

Taiwan Semiconductor Manufacturing Co TSM, the world’s largest contract chipmaker is eyeing plans to build new factories in the United States and Japan, Reuters reported on Thursday.

What Happened: The Taiwan-based company, which supplies chips to Apple Inc AAPL, said it will expand production capacity in China and did not rule out the possibility of a "second phase" expansion at its $12 billion manufacturing facility in Arizona. 

In addition, the chipmaker, which also counts Nvidia Corp NVDA and Qualcomm Inc QCOM as customers, is also reviewing a plan to set up a specialty technology wafer fabrication plant, or fab, in Japan.

See Also: Apple Supplier TSMC Sees Q2 Profit Jump 11% On Higher Chip Demand

Why It Matters: Taiwan makes the majority of the world’s most advanced chips that are used in smartphones, laptops, and cars. TSMC’s overseas expansion is being seen as a move aimed at lowering the dependability on a particular region, especially given China’s geographical proximity to Taiwan, Reuters noted.

A global semiconductor chip shortage has boosted demand as automakers, smartphone and appliance makers scramble to secure supplies. Further, the pandemic has lifted the demand for work and learn-from-home devices.

Chipmakers are scrambling to meet demand and expand capacity. Semiconductor giant Intel Corp INTC is in talks to buy contract chip maker GlobalFoundries for $30 billion, the Wall Street Journal reported on Thursday, citing sources.

Price Action: TSMC shares closed 5.5% lower at $117.53 on Thursday.

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Photo: Courtesy of Taiwan Semiconductor Manufacturing Co., Ltd

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