Apple Supplier TSMC To Spend Record $44B On Capacity Expansion This Year

Key Apple Inc AAPL supplier and the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co Ltd TSM plans to spend up to $44 billion in 2022 to expand capacity, Nikkei Asia reported on Thursday.

What Happened: The capacity expansion plan comes amid a rise in demand for advanced chips used in AI and 5G-driven applications for cars, data centers and smartphones.

TSMC’s capex allocation is between $40 billion and $44 billion this year, much higher than the record-breaking spending of $30 billion for 2021.

See Also: Intel To Dedicate Production At Ireland Facility For Auto Chips As Ford, Tesla And Others Face Crippling Shortages

TSMC last year said it planned to spend $100 billion over the next three years to expand its chip fabrication capacity to cater to the anticipated growth in demand for fifth-generation telecommunications (5G) technology.

Why It Matters: Global chip shortages have forced chipmakers such as TSMC to significantly ramp up expansion plans. Intel Corp INTC had said last year it would invest about $90 billion over the next decade to build new chip-making facilities in Europe.

See Also: Apple Supplier TSMC's Q4 Profit Jumps 16.4% Amid Higher Chip Demand

Chipmakers have also been raising prices, helping them boost profit margins.  

The company, which also counts Nvidia Corp NIVIDIA as a customer, reported a 16% jump in quarterly profit to $5.98 billion on Thursday as demand for chips that are used in computers, smartphones and automobile sectors rose. 

The Taiwan-based company has forecast first-quarter revenue to be in the range of $16.6 billion to $17.2 billion.

Price Action: TSMC shares closed 5.3% higher at $139.2 a share on Thursday.

Photo: Courtesy of TSMC