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TSMC’s board has decided to spend just under 3 billion dollars on expanding its capacity. This is in response to the global chip shortages affecting various sectors.

TSMC reports that two decisions were made during a board meeting. The first decision concerned the distribution of shares among employees and board members within the company. However, the second decision shows that the company is setting aside 2.887 billion dollars to install “mature technology capacity”.

More machines and factories

The company does not elaborate on what exactly this mature technology entails. Presumably, however, it involves building more machines or factories that can build chips on existing processes. This is the company’s response to the chip shortages that are currently prevalent, particularly in the automotive industry.

Large investments to counter chip shortages

It is only a fraction of the 100 billion dollars that TMSC announced earlier this month it would invest in expanding its production capacity. This was a medium-term announcement, namely for the next three years. Presumably, the decision made on Thursday is a first step in this plan.

The expansions in chip production are badly needed. There is a scarcity in the supply of chips, caused by the initial collapse and then huge increase in the demand for microchips around the Covid-19 pandemic. Chip manufacturers, including TSMC, are running at full capacity to keep up with demand. However, the company does not see the shortage getting resolved in the short term. A permanent solution requires the construction of more factories, but it will take years before these are finally operational. Only after 2022 does TSMC expect that chip production will be able to keep up with demand.

Intel and Samsung

Intel also paints a bleak picture for the short term. The company wants to ease some of the pain by opening up its factories for, among other things, the production of chips for cars, but according to Intel CEO Pat Gelsinger, it will be at least a year before the problems are solved. Like TSMC, the company is investing heavily in the production of new chip factories. The company wants to build more factories in both the US and Europe. The company has set aside 20 billion dollars (16.6 billion euros) for this purpose. Next week, Gelsinger is coming to Europe, presumably to talk about this expansion.

Samsung Electronics, the other major player with cutting-edge chip capacities, also has big plans to invest billions in its production capacity. Concrete plans in that area are not known, however.