TSMC Forced to Spend Billions in Order to Retain Market Dominance

The aggressive investment of its competitor, Samsung Foundry, would drive the Taiwan Semiconductor Manufacturing Company (TSMC) to spend more on capital expenditure, according to an expert. 

These remarks come as TSMC gears up for its third quarter results release earlier this week. The firm is under intense scrutiny as the personal computer sector is struck by economic fluctuations and loses major players like Advanced Micro Devices, Inc. (AMD), NVIDIA Corporation, and Intel Corporation. The United Daily News (UDN) said that an expert predicted that TSMC’s capital expenditure will reach yet another record high in 2023. This will occur despite the company dealing with cost hikes and a downturn in consumer demand, which should instead encourage it to use capacity efficiently to prevent idle machines.

TSMC will Reportedly Ramp Up its Expenditure Amid Samsung’s Fast-Paced Progress

However, Samsung’s aggressive investing was a significant consideration in TSMC’s capital expenditure choice. The Korean company, whose manufacturing processes were allegedly used fraudulently earlier this year, was fast to declare 3-nanometer manufacture and then production for the more recent 2-nanometer technology, which also fulfills TSMC’s timeframe for 2-nanometer production. 

These initiatives will need to be supported by significant capital expenditures, and over the next five years, Samsung aims to invest a staggering $355 billion in its semiconductor and biotechnology businesses. According to reports, chip fabrication will account for the majority of this investment, especially given the high expenses associated with establishing costly equipment and facilities.

Image: IC Insights

Therefore, according to today’s analysis, TSMC will need to invest aggressively to preserve its advantage over Samsung in the global contract chip manufacturing business as well as to establish a solid presence in the market for next-generation technologies like 2-nanometer. To begin 2-nanometer manufacture in 2025, both TSMC and Samsung will need to deploy cutting-edge equipment for chip fabrication. 

These elements, in the analyst’s opinion, will force TSMC to increase its investment next year, with part of this allocation coming from this year’s spending. According to the research released today, TSMC will have to postpone part of this year’s investment until 2023 due to rising expenses and a slump in the sector. This year’s spending is expected to be close to $40 billion, while next years will likely exceed $41 billion. In a letter from January, investment firm JPMorgan predicted that the capital expenditure would be $42 billion this year. 

According to research company IC Insights, capital investment in the semiconductor sector is slowing down. A macroeconomic climate that is slowing and an overstock in the business are the main cause of this. According to the research organization, industry spending will total $185 billion in 2023.

Muhammad Zuhair
Passionate about technology and gaming content, Zuhair focuses on analysing information and then presenting it to the audience.
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