Taiwan Semiconductor Manufacturing Co. (TSMC) pledged $100 billion over the next three years to expand its semiconductor fabrication capacity, according to a recent Bloomberg report.

“We are entering a period of higher growth as the multiyear megatrends of 5G and [high-performance computing] are expected to fuel strong demand for our semiconductor technologies in the next several years. In addition, the COVID-19 pandemic also accelerates digitalization in every aspect,” the company said in a statement provided to SDxCentral.

To keep up with demand, TSMC is moving rapidly to increase capacity and to support manufacturing and research and development for advanced semiconductor technologies, the company said. TSMC has not, however, addressed how it plans to raise these funds, but did say the investments would be made between 2021 and 2023.

TSMC is the largest and one of the most advanced high-volume semiconductor fabricators on the market, supplying some of the biggest chipmakers in the world. Customers include Apple, AMD, Nvidia, and Qualcomm.

The company had previously announced plans to ramp its 2021 capital expenditures to between $25 billion and $28 billion, up from $17 billion in 2020, in a bid to combat a global semiconductor shortage triggered by surging demand, particularly in the consumer and automotive industries.

But even before the semiconductor shortage took hold, expansion was on TSMC’s mind. Last spring, the company announced plans to build a $12 billion foundry in Arizona, which would produce roughly 20,000 wafers per month when it opens in 2024. Now rumors indicate that the company may be looking to expand the scope of this investment. A recent UDN report claimed TSMC could build as many as six foundries in Arizona to meet demand.

According to Wayne Lam, senior director of research, Americas at CCS Insight, assuming it costs TSMC $20 billion to build a fab, the company's capital outlay would allow for five new foundries within the next three years.

"That would double the number of 'gigafabs' that TSMC currently operates," he added. "Clearly this is a big deal and it doesn't take much math to understand that TSMC is investing heavily and is leading the industry in terms of late generation process geometry capacity."

Lam adds that Intel's plans to shift much of its manufacturing — reportedly as much as 20% — is likely putting pressure on TSMC to add capacity.

"For TSMC there is clearly a need for additional production capacity. Not the least of which is Intel's planned outsourcing of leading-edge manufacturing — I believe upwards of 20% of their production — to TSMC, which will eat up a bunch of capacity, especially at the latest 5-nanometer node," he said. "The larger story is that semiconductor demand is increasingly driven by not only consumer purchase behavior but other transformative technology trends."

The semiconductor shortage has impacted everything from consumer electronics to automakers. Several automakers, including General Motors, Ford, and Toyota, have been forced to cut production as they struggle to source critical components used in everything from infotainment to engine control units.

The problem is twofold, according to Supplyframe CMO Richard Barnett, who, in an earlier interview, said that at the same time automakers were ramping down production in the wake of the pandemic, there was a surge in consumer electronics demand driven by remote workers and schooling.

According to a recent Gartner report, the worldwide semiconductor market grew 7.3% in 2020, after suffering a 12% decline the year prior.

“Lockdowns vastly increased work from home and e-learning, and any markets that facilitated those activities benefited,” Andrew Norwood, research VP at Gartner, wrote, adding that this was further exacerbated by strong demand for server products as hyperscalers rushed to keep up with a huge spike in traffic wrought by the nearly overnight shift to remote work.

As a result, by the time auto sales started to recover, the automakers quickly discovered that the semiconductor capacity that they’d come to rely on was no longer there.

Faced with the semiconductor shortage and tantalized by $38 billion in incentives, Intel last week announced its plans to enter the foundry services business.

The new division, called Intel Foundry Services, is part of the company’s Integrated Design Manufacturing 2.0 — or IDM 2.0 — initiative, which seeks to expand and diversify the company’s manufacturing capabilities, including internal, external, and contract manufacturing.

Intel has traditionally developed and produced semiconductors internally in its U.S., Ireland, and Israel-based fabs. Now, the chipmaker is looking to open its foundries to contract customers beginning with a $20 billion investment in two new facilities located on its Ocotillo campus in Arizona.

“Today, I’m announcing our plans to be a world-class foundry business and a major provider of U.S. and European-based capacity to serve customers globally,” newly minted Intel CEO Pat Gelsinger said, during a press conference last week.

According to Intel, the two new Arizona facilities are only the beginning. The company plans to continue expanding its foundry footprint over the next several years with additional facilities outside the U.S.