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upstart writes:

TSMC invests in new capacity despite forecasts chip demand will ease:

Taiwan Semiconductor Manufacturing Company plans to raise its capital expenditure by almost a third this year as the world's largest contract chipmaker defies analyst warnings of softening demand for technology gadgets.

TSMC expects capital expenditure to reach $44 billion this year, a 32 percent increase from the $30 billion spent in 2021 and triple the amount in 2019, the company said on Thursday.

The push underscores the outsized role semiconductors are coming to play in goods far beyond classical electronics products, from cars to factory equipment. It also reflects TSMC's dominance of global chip manufacturing.

The scale of TSMC's spending will also "put a ceiling" on ambitious plans from Samsung, TSMC's closest rival in contract chipmaking, and Intel, which has also entered the foundry business, to challenge the Taiwanese company's leadership, said Dylan Patel of Semianalysis.

[...] TSMC has built a massive fabrication plant, or fab, in southern Taiwan for advanced 3 nanometer chips, a technology level at which production is scheduled to begin later this year. It is also building a new fab for production at 5 nanometers, the most advanced technology level currently in production, in the US.

The company said the expansion was needed because demand for its chips would continue to increase by double-digit margins for years to come, even though some analysts have predicted a slowdown after a growth spurt in the past two years.

"We observe end-market demand may slow down in terms of units, but silicon content is increasing," said CC Wei, TSMC's chief executive. "So even if there's a slowdown, we believe it could be less volatile for TSMC. So we expect our capacity to remain very tight throughout 2022."

See also Tom's Hardware and a video at Bloomberg.

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