TAIPEI (Taiwan News) — Taiwan Semiconductor Manufacturing Company (TSMC) said over an earnings call on Thursday (Jan. 14) that it will raise its capital spending this year to as much as US$28 billion amid surging demand.

The world’s largest contract chipmaker announced it is budgeting US$25-28 billion for capital expenditures this year, up from US$17.2 billion in 2020, TSMC CFO Wendell Huang (黃仁昭) said during the call. Around 80 percent of the capital expenditure (capex) budget will be used to develop the company’s 3 nm, 5 nm, and 7 nm processes, another 10 percent will go to its 3D chip-stacking and packaging technologies, and the remaining 10 percent will be used to develop specialty processes.

According to TSMC CEO C.C. Wei (魏哲家), the company expects revenue this year to increase by about 15 percent — outpacing the foundry sector's forecasted growth of 10 percent — due to strong demand for 5G smartphones, high-performance computing devices, automotive electronics, and internet-of-things products, CNA reported.

Wei said he expects 5G smartphones to make up around 35 percent of smartphone sales in 2021, up from 18 percent in 2020. TSMC is now forecasting its revenue will grow at a compound annual rate of 10-15 percent for the next five years, up from previous estimates of 5-10 percent.

Wei also noted a shortage of automotive-related chips, which has caused carmakers like Nissan, Toyota, Ford, and Honda to scale back production, according to Nikkei Asia. He said the company will work closely with clients to address supply constraints. TSMC produces auto-related chips for clients such as NXP, STMicroelectronics, Infineon, and Renesas Electronics.

After the earnings call, TSMC said it is also looking into setting up an R&D center in Japan that will focus on developing 3D chip-stacking technologies with Japanese chip material suppliers, according to CNA. However, the Taiwanese company denied media reports that it is planning a joint-venture or intending to build a chip plant in Japan.