TSMC: component shortages could continue through 2022

Shawn Knight

Posts: 13,170   +132
Staff member
The big picture: To combat the shortage, the world’s largest contract chipmaker is increasing investments to expand capacity and build upgrades this year. TSMC already spent $8.8 billion in the first quarter and now expects to shell out around $30 billion over the span of 2021. Still, it takes time to build facilities to increase output, so for, we're left to sit and wait.

Taiwan Semiconductor Manufacturing Company (TSMC) doesn’t see an end to the ongoing global chip shortage anytime soon.

During a recent conference call, CEO C.C. Wei told analysts that they continue to see high levels of demand. “In 2023, I hope we can offer more capacity to support our customers. At that time, we’ll start to see the supply chain tightness release a little bit,” the executive added.

Wei’s sentiments more or less echo what we’ve heard from other major industry players as of late.

Nvidia CFO Colette Kress said earlier this week that overall demand remains very strong and continues to exceed supply while channel inventories remain quite lean. “We expect demand to continue to exceed supply for much of this year,” Kress added.

Intel CEO Pat Gelsinger recently told The Washington Post that semiconductor companies can take some short-term steps to help meet demand. “We do believe we have the ability to help,” Gelsinger said, but added that “I think this is a couple of years until you are totally able to address it. It just takes a couple of years to build capacity.”

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Dimitriid

Posts: 542   +926
2022? Why stop there just make it 2023. Late 2023. Listen: just keep making stuff up however long you need to just maintain the ridiculously inflated prices for as long as possible, is not like we're going to accuse you of blowing things out of proportion to price fix stuff and artificially manipulate supply and demand that would neeeeever happen right!?
 

Cycloid Torus

Posts: 4,747   +1,547
“We expect demand to continue to exceed supply for much of this year,” - no numbers, just words. Seems more likely to me that there will be changes in supply and demand which impact this: less water in Taiwan, retention and use of older foundries, change in consumption patterns, miner fads, etc.

Does anyone actually track this stuff in a public format?
 

Dimitriid

Posts: 542   +926
“We expect demand to continue to exceed supply for much of this year,” - no numbers, just words. Seems more likely to me that there will be changes in supply and demand which impact this: less water in Taiwan, retention and use of older foundries, change in consumption patterns, miner fads, etc.

Does anyone actually track this stuff in a public format?

I think that TSMC is pushing this narrative just to ensure they can get their expansion plans approved: they know they can probably but *eventually* get a lot of use out the capacity but if they just tell their board of directors "We want several new billion dollar plants to supply miners" they'll go "LOL nope!" and not approve those moves: they know crypto it's too volatile to trust long term investments like entire new fabs.

But TSMC wants to expand anyway so if they can keep up this story of "We predict this crazy demand will continue until 2022 or 2023!" then they might get their expansion approved. By the time that production is ready to go chances are crypto will be long gone back down in price but they rather have the capacity and sell it later than not have it and miss out on another crypto craze in say, 2024.
 

neeyik

Posts: 1,877   +2,191
Staff member
“We expect demand to continue to exceed supply for much of this year,” - no numbers, just words. Seems more likely to me that there will be changes in supply and demand which impact this: less water in Taiwan, retention and use of older foundries, change in consumption patterns, miner fads, etc.

Does anyone actually track this stuff in a public format?
Production data is never public, so tracking isn't possible. TSMC claim that water shortages shouldn't affect their operations, and 49% of the 1Q21 revenue was through their N7 and N5 nodes (16FF and 28FF being 14% and 11% respectively) so older foundries shouldn't impact matters either.

The only thing one can look at are the reported financial figures:


Here are the key parts:

Finances (In NT$ billions) 1Q21 4Q20 1Q20
Net Revenue: 362.41 361.53 310.60
Total Operating Expenses: (39.11) (38.32) (32.33)
Research & Development: (30.76) (29.94) (24.97)
SG&A (8.35) (8.38) (7.36)
Other Operating Income and Expenses (0.19) 0.20 0.07

Net Revenue by Platform - 1Q21, 4Q20, 1Q20
Smartphone: 45% 51% 49%
High Performance Computing: 35% 31% 30%:
Internet of Things 9% 7% 9%
Automotive 4% 3% 4%
Digital Consumer Electronics 4% 4% 5%
Others 3% 4% 3%

So year-on-year, TSMC has seen an increase of 17% for net revenue and a 21% increase in operating expenses. The latter is attributed to R&D costs for N5, so if one discounts this, then it would seem that their rise in income is down to a rise in production, rather than just an increase in fees. The 5% change between HPC and smartphone revenue would also suggest that this area has seen an uptake in demand, but we're all acutely aware of that.

In the investor conference (link - go to 11:30), the CEO briefly talked about supply issues being down to long term increases in demand, as well as short-term factors; he acknowledge how Covid-19 accelerated the implementation of their products being part of everyone's lives, supply chain uncertainties, and 'geopolitical tensions' as all being mitigating items too.

He also remarked that supply security was an issue, but didn't say more on this. This could mean that some of TMSC's larger customers were placing large block bookings, far ahead of current schedule, instead of the more traditional forecast-and-demand ordering. It could easily just as be anything else, though.
 

neeyik

Posts: 1,877   +2,191
Staff member
@neeyik what do you think of the rise in days of inventory? expanded 30 days over 12 months - shipping issues?
That and component supply problems. Take any graphics card, for example, and count off all the individual electronic items on the board: GPU, DRAM, voltage regulators, capacitors, resistors, and chokes. Then factor in the rest of items needed: video output connectors, power connections, fans, etc. The likes of Asus has to buy all of these items and each of those vendors are under the same demand and supply problems.

This was the point about supply chain uncertainties the CEO was making. All it takes is for one key supplier to start openly worrying about meeting demand, and then you'll have a whole host of customers wanting to place orders in early, to ensure their production yields aren't affected.

The whole semiconductor manufacturing industry is a teetering mess of chains. It's a wonder that it hasn't gone pop, like it has now, years ago. Your point about shipping, of course, is just compounding the situation to hell (the shipping issues, that is, not your point!).
 

terzaerian

Posts: 913   +1,299
2022? Why stop there just make it 2023. Late 2023. Listen: just keep making stuff up however long you need to just maintain the ridiculously inflated prices for as long as possible, is not like we're going to accuse you of blowing things out of proportion to price fix stuff and artificially manipulate supply and demand that would neeeeever happen right!?
Shades of "15 days to flatten the curve," eh?
 

kiwigraeme

Posts: 324   +258
Before Covid PC sales were flat at best .
While the new CPUs are good for a longtime
GPUs really most just want a 3060 4060 like one for $300 or less
Only enthusiasts with embrace DDR5 and zen 4 etc in first year

so growth must be in not home PCs areas to sustain extra Fabs going forward
 

neeyik

Posts: 1,877   +2,191
Staff member
Before Covid PC sales were flat at best .
While the new CPUs are good for a longtime
GPUs really most just want a 3060 4060 like one for $300 or less
Only enthusiasts with embrace DDR5 and zen 4 etc in first year

so growth must be in not home PCs areas to sustain extra Fabs going forward
When the industry refers to PCs, it includes laptops, 2-in-1 notebooks, desktops, etc. The recent growth has been mostly in laptops, due to home working, although desktops have improved a little. However, to support the change in work patterns, the network infrastructure has needed beefing up - more account servers, more datacenters, more cloud storage. With everyone and their dogs suddenly using the likes of Zoom, the demand for server grade CPUs, etc must have gone through the roof. Intel only saw an 11% increase in revenue in their data-centric sector but for AMD, it was up by 176%. No wonder TSMC is happy to invest billions into new foundries.
 

captaincranky

Posts: 16,768   +5,516
2022? Why stop there just make it 2023. Late 2023. Listen: just keep making stuff up however long you need to just maintain the ridiculously inflated prices for as long as possible, is not like we're going to accuse you of blowing things out of proportion to price fix stuff and artificially manipulate supply and demand that would neeeeever happen right!?
That's not very nice, not in mention downright rude and insensitive. Oh well, I gave you a like anyway. (y) (Y) 🤣
 
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Markoni35

Posts: 1,075   +441
2022? Why stop there just make it 2023. Late 2023.

That's exactly what I expect to happen. Because every artificially made crisis (or war) has to last around 4 years. It started around 2019, with someone spreading a lab-created virus (oh, pardon, it was a bat spitting into pig's mouth, if you believe the official explanation). The corona crisis, and all related crises will last this year, next year, and end in 2023. Everything is okay. They are sticking to the schedule.

One day, let's say two-artificial-crisis later, you'll be able to tell to your grandsons what happened. Not that many people, especially those vaccinated, will have grandsons in the future. But it can happen.
 

Shadowboxer

Posts: 1,490   +1,088
The demand won’t go away, crypto decline might relieve some of it but the fact is the world is turning digital and with more and more “smart” devices, appliances and forms of transport being produced personally I can only see it getting higher.

This shortage won’t end until we get more supply and that will take a couple of years at least I reckon.