TSMC 2021 Highlights

TSMC (Taiwan Semiconductor Manufacturing Company) is the world’s largest dedicated independent semiconductor foundry and one of the largest companies in Taiwan. It manufactures lots of different semiconductor products, with node sizes ranging from 130 micrometers all the way down to 3 nanometers.

Over the course of 2021, TSMC has pushed the industry forward, working at or close to full capacity to meet the increased demand. Let’s have a look at some of the most notable events.

2021 Highlights

The main key events that defined TSMC in 2021 were:

• Expanded the budget for future investment up to $100 billion.
• Issued bonds with a value close to $10 billion to fund current efforts and construction projects.
• Grew their net revenue by almost 25% YoY (Year-over-Year) when looking at the quarterly reports from 2021 versus those from 2020.
• Started construction on the Arizona fab.
• Announced 2 more fabs to be constructed, one in Japan and one in Taiwan.
• Hinted at more fabs to be built in the US and Europe.
• Made a breakthrough in the 1nm process technology.

Finance

Even though it is still too early for the annual 2021 report to be published by TSMC, results from 1Q21, 2Q21, 3Q21 and 4Q21 are very informative and show great promise for the future of the company.

The company projects a total of $56.59 billion in net revenue, with $12.92 billion in 1Q21, $13.29 billion in 2Q21, $14.88 billion in 3Q21 and an expected $15.5 billion in 4Q21. These equate to increases YoY (Year-over-Year) of 25.315% in 1Q21, 28.034% in 2Q21, 22.57% in 3Q21 and an estimated 22.239% for 4Q21.

For more detailed information, all the financial statements can be found on TSMC’s official investor website.

In February, Reuters and EETimes reported that TSMC plans two sales of bonds that would raise about $9 billion to expand production, possibly helping to ease a critical shortage of silicon. The bond package consists of domestic unsecured corporate bonds worth $4.29 billion and $4.5 billion in US dollar-denominated bonds. This money would “finance TSMC’s capacity expansion and/or pollution prevention-related expenditures”, according to a company statement.

In March, both Reuters and CNBC reported that TSMC plans to invest $100 billion over the next three years to increase capacity at its plants.

In August, TaiwanNews and Tom’s Hardware reported that there will be substantial price hikes in the incoming chip production. Expected rates are between 7% and 20%, an increase which will happen in virtually all TSMC products. The price increase could be in response to TSMC’s plan to boost capital expenditures by US$100 billion over the next three years, in addition to its overseas expansion plans in the U.S. and Japan.

In September, a report from Focus Taiwan revealed that the TSMC board has agreed to sell $1 billion worth of bonds on Taiwan’s OTC market, with proceeds to be used to finance the construction of new factories and purchases of production equipment.

In November, a new report from Tom’s Hardware presents TSMC disclosed in a filing that it received temporary receipts of around $3.825 billion (NT$106,33 billion) from customers as of September 30, 2021. Temporary receipts from TSMC’s customers are payments received to retain its capacity that it received $3.825 billion in temporary receipts from customers.

Fab Expansions

Multiple fabs and foundries were announced or rumoured. The official information for 2021 includes the following:

• Arizona fab is official and has started construction.
• Japan fab is official and has gotten all the approvals needed to move on to the next step.
• Germany fab is still under discussion, but may be more than a rumour.
• Kaohsiung fab is still under discussion and just a rumour so far.

As the chip shortage has stayed longer and longer, TSMC has reiterated its plans to increase funding towards further expansions, both of old fabs and of new locations.

In January, The Japan Times reported that chip giant Taiwan Semiconductor Manufacturing Co. will build an advanced packaging facility in Japan together with the country’s trade ministry.

In February, DigiTimes reported on TSMC’s expansion of 5nm capacity, exceeding 120,000 wafers monthly in 2H21. On the R&D front, NIKKEI Asia reported that TSMC is planning to build a new $190 million R&D site near Tokyo, Japan, as the demand for advanced semiconductor equipment and materials becomes increasingly important.

In March, Electronics Weekly reported that TSMC is expanding its fab plans in Arizona to build a Gigafab capable of running 100k+ wpm. TSMC’s  plan is now to invest $35 billion for a fab which will be capable of running 3nm wafers as well as 5nm.

Related to the workforce, Asia Times reported that recruitment events are planned at 10 universities, with a need for around 9000 new employees to support its expansion in Taiwan. The company is seeking new employees from a wide range of backgrounds, including electronics, chemistry, finance, human resources, psychology, and labor relations.

In May, Taiwan News reported that TSMC is considering plans to increase its Arizona investment by tens of billions of dollars, taking into consideration producing 3nm chips instead of or alongside 5nm chips. ITPro and Reuters reported that TSMC is planning to build several more chipmaking factories in the U.S. state of Arizona beyond the one currently planned. These plans were confirmed by three sources associated with TSMC. According to ABC, Arizona’s fab workforce will consist mostly of recent college graduates, with TSMC looking to train them on the new technologies.

In June, Reuters reported that TSMC had begun construction at the Arizona factory site. At home, Taiwan News reported that the original plan to build a 2 nm facility in Hsinchu, with later expansion to Taichung, remains in place. An additional 90 hectares are acquired in Hsinchu Science Park for the 2nm fab, as reported by DCD.

In July, Taiwan News reported that TSMC gets government approval to build a 2 nm fab in Hsinchu’s Baoshan Township, with construction starting in early 2022. In Japan, KyodoNews and The Japan Times reported that the possible location for the first Japan fab was rumored to be in the Kumamoto Prefecture, known for having an abundance of the water needed for semiconductor manufacturing. In the EU space, EE reported that TSMC had plans for 16 nm/12 nm to be in Dresden, Germany, satisfying the needs of companies like NXP Semiconductor, Infineon Technologies and On Semiconductor, which have a focus on automotive chips.

In August, Reuters reported that Infineon Technologies CEO, Reinhard Ploss, supports the idea of a TSMC plant in Germany, expressing a clear preference for its technology over that of Intel. As for the Arizona fab, Taiwan News reported that parts for the Arizona fab will be sent via cargo ship, to lower costs associated with setting up the plant.

In September, Taipei Times and Electronics Weekly reported that a new fab is to be built near Kaohsiung, which would produce 6/7nm technology chips.

In October, The Japan Times reported that the plant in Japan has been announced to begin construction in 2022 and start operations in 2024. A possible partnership with Sony is also considered.

In November, Sony, The Verge, KyodoNews and Taiwan News reported that the Japan foundry had been officially announced to begin construction in 2022, in partnership with Sony Semiconductor Solutions Corp. The plant will cost around $7 billion, will be located in the southwestern prefecture of Kumamoto and will utilize the 22nm and 28nm processes. A new subsidiary of TSMC has been established to construct and operate the plant, named Japan Advanced Semiconductor Manufacturing Inc.

Also, Taipei Times reported that TSMC plans to roughly double the capacity expansion over the next three years, an effort meant to cope with the rapidly growing demand for chips in HPC (High Performance Computing) applications and electronic devices.

In December, both DCD and ANE reported that TSMC is in discussions with Germany’s government about potentially constructing a foundry in the country. Also, Reuters reported that Taiwan’s government gave the OK for TSMC’s new Japan chip plant.

Products

During 2021, TSMC has reached max capacity of its 5nm process fabs and booked all availability until 2024 for the upcoming 3nm process, despite increasing prices for all its products by 7%-20%.

In January, Tom’s Hardware reported that TSMC Preps for 3nm risk production. The 3 nm process node is still in development and will be used starting from the second half of 2022. Also, CNBC reported that Intel reaches out in need of manufacturing power for the upcoming DG2 discrete graphics card, which will use an enhanced 7nm process.

In February, Taiwan News reported that TSMC’s 3nm capacity got booked through 2024, with some of the major recipients being Apple, AMD, Nvidia, Xilinx and Qualcomm.

In March, SeekingAlpha reported that new supply deals were signed with Intel. Also, MacRumours reported that 3nm production is on track to begin volume production in 2022.

In May, Hexus and Verdict reported that TSMC and partners announced a 1nm process breakthrough. Taiwan Semiconductor Manufacturing Company (TSMC), the National University of Taiwan (NTU) and Massachusetts Institute of Technology (MIT) have jointly announced that a significant breakthrough was made in the development of 1-nanometer (nm) chips.

The research results published in the international journal Nature found that the use of semi-metal bismuth (Bi) as the contact electrode of the two-dimensional (2D) material can greatly reduce the resistance and increase the current. This can achieve energy efficiency close to the existing physical limits of semiconductor sizes.

In June, Verdict reported that TSMC is to start trial production of 4nm semiconductor ahead of schedule, in the third quarter of 2021, one quarter earlier than previously planned. The 3nm semiconductor is set to be mass-produced in the second half of 2022 as planned. On the 3 nm process side, SeekingAlpha reported that the reduced cadence of N3 is confirmed by TSMC to be due to delays.

In August, TechRadar reported that TSMC appears to be running its advanced 5nm production lines at full capacity and may even be forced to prioritize more “lucrative” clients due to the ongoing semiconductor shortage.

Also, Reuters reports that Intel had new details of its turnaround strategy to source subcomponents of its chips from external factories, including new specific partnerships with TSMC.

In December, Business Standard and Tom’s Hardware reported that production of chips based on the 3nm process is due to start in the fourth quarter of 2022. Pilot production started at Fab 18 at the Southern Taiwan Science Park in Tianan.