TSMC expects to see strong increase in business, despite Coronavirus outbreak

“TSMC is reportedly investing over $6.7 billion in chipset making facilities to increase its production capacity.”

Taiwan Semiconductor Manufacturing Company (TSMC), which is one of the world’s largest chipset manufacturing companies, expects to see increased demand of chipsets thanks to the advent of 5G connectivity. In order to factor in this increased demand, the company is reportedly investing $6.7 billion in new fabrication facilities, thereby increasing the overall manufacturing capacity that will help it meet the increased demand. The update comes via an announcement from the firm’s board of directors, which has stated that the Coronavirus outbreak in China has not led to a reduction of orders from its clients so far.

TSMC works as the chipset manufacturing partners of some of the world’s leading companies at the moment, including Apple, Qualcomm and the likes. A report on the matter states that due to increased demand for phones, particularly 5G phones, expected by vendors such as Apple, TSMC is estimating a planned capital expenditure of around $15 billion in 2020 — an increase of over 35 percent over 2019. This increase will include an estimated $2.5 billion for new, 5nm chipset fabrication process that is expected to be used by Apple, as well as an additional $1.5 billion for TSMC’s established 7nm process as well.

Among its major vendors, Apple is slated to move to TSMC’s 5nm fabrication process with its upcoming A14 Bionic SoC, which will also reportedly be the brand’s first 5G modem-equipped SoC. The SoC will hence be based on a more refined chipset fabrication node over Qualcomm’s flagship processor for 2020, the 7nm-based Snapdragon 865 paired with the X55 5G modem. Huawei is also expected to upgrade to a 5nm SoC, with its chips also to be made by TSMC. What’s interesting to note is that each of TSMC’s vendors are seemingly expecting a decline in shipments, coupled with strained supplies, due to factories and assembly lines in China being on lockdown due to the Coronavirus outbreak. However, none of this will apparently affect the overall upturn in the smartphone industry, which in turn is expected to boost the world’s semiconductor business.

TSMC will hope to rope in billions in 2020 buoyed by the demand for 5G chipsets, after the past few years of stagnation in the industry. The company has already been instructed by Apple to increase production for its erstwhile A13 Bionic SoC based on higher than expected demand for the iPhone 11, and the upcoming iPhone 9. With such increases in production, the company will hope that its new facilities allocation for 2020 comes in handy to help it cash in on the prevailing industry trend for the year.