Fixing global auto chip shortage is "priority", says semiconductor firm

Taiwan Semiconductor Manufacturing Company (TSMC) has said that dealing with the global automotive chip shortage was its "priority", as the world's biggest contract chipmaker received a quarterly boost in demand from 5G smartphones.

The company made the pledge yesterday, following the news that many of the largest automotive companies, such as Ford, Nissan, Fiat and Toyota, were having to cut production due to the shortage of the chips in the Chinese market.

"The shortage in automotive supply has become more obvious. In TSMC, this is our top priority," said CC Wei, the chief executive, whose company also supplies chips for major electronics companies including Apple.

Also read: Apple & Hyundai to team up on autonomous EVs, claims Korean news

"The automotive industry needs a lot of semiconductor components . . . such as mature technology for sensors and power management. We are working with customers to mitigate the shortage impact," he said.

Wei said that the company had been struggling to meet demand following a surge in demand from auto companies in late 2020, especially in light of the supply having already been squeezed from high demand earlier in the year from other manufacturing companies.

TSMC released its fourth-quarter results recently, revealing that its revenue met the top end of its own estimates and increased by 14% year-on-year to $12.7 billion (€10.45 billion). The company's net income had risen year-on-year by 23%. 

Revenues in 2020 were given a major boost by the pandemic as demand for smartphones and computers rose and companies concerned about the impact of the coronavirus pandemic on the supply chain began bulk buying chips.

TSMC supplies roughly half the world's foundry market and is watched carefully by investors as an indicator of global chip demand. Its shares on the NYSE have doubled in the last year.

Nonetheless, the company has been impacted by US measures to cut Chinese telecoms group Huawei out of the global marketplace. Washington DC passed sanctions last May which prevented suppliers - including TSMC - from selling certain products to Huawei, which previously had accounted for around 10% of its revenue.

The company says it is forecasting revenue growth to fall to the mid-teens this year, after leaping 25% in 2020. 

TSMC has also raised its capital expenditure forecasts for this year, up to $25 billion to $28 billion, from $17 billion in 2020.

Some analysts have forecasted another boost for TSMC in the global foundry market will come from the declining competitiveness of rival Intel - Apple's former partner who was ditched in favour of TSMC. It is widely expected that Intel will begin outsourcing some of its chip production to TSMC in 2023, which would increase the company's revenues by a further 5 to 10%.

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