Taiwan asks TSMC to explain the shortage of semiconductors 

Economy minister's summons follows an appeal from German government to Taipei  asking for a boost in production of chips to help European nation's ailing car industry

Taiwan asks TSMC to explain the shortage of semiconductors 
A guard stands near the logo of Taiwan Semiconductor Manufacturing during an investor conference. Photo: Reuters.

(ATF) – Taiwan’s economics minister has grilled executives from Taiwan Semiconductor Manufacturing Co to explain the global shortage of automotive microchips, the ministry said on Monday January 25.

The minister, Wang Mei-hua, said TSMC told them they would “optimise” the production process of chips to make it more efficient and prioritise automotive chip production if it can increase capacity.

The ministry’s questioning follows an appeal from Wang’s German counterpart to the Taiwanese government to boost chip production to help the ailing German car industry.

In a letter to Wang, German economy minister Peter Altmaier said the current shortage endangers the recovery of Germany’s auto sector and thus the revitalisation of the global economy.

The industry has been hit by multiple crises, causing the shortages.

China's Huawei Technologies has been bulk-buying chips to beat US sanctions, while a fire at a chip plant in Japan, lockdowns affecting Southeast Asia factories, and a strike in France have all caused production and distribution stresses.

The massive demand for automotive semiconductors has been a boon for companies such as TSMC.

HEALTHY BOTTOM LINE

Helped partly by the launch of Apple’s iPhone 12, the Taiwan chipmaker’s net profit for the October-December fourth quarter soared 23% to NT$142.8 billion ($5.1 billion).

Revenue jumped 22% to a record $12.68 billion.

The chipmaker’s share price has jumped more than 70% over the past 12 months, giving it a market value of $560.7 billion. TSMC’s stock fell nearly 2.5% on January 25 to NT$630.

TSMC expects to lift capital spending on the production and development of advanced chips to between $25 billion-$28 billion this year, as much as 60% higher than in 2020. It also upgraded its compound annual growth rate targets for revenue for the 2020 to 2025 period to 10%-15% from an earlier estimate of 5%-10%.

Several carmakers have seen production plans hit by insufficient supply. “We are working with our customers to mitigate the shortage impact,” chief executive CC Wei said earlier this month.

With reporting by Reuters

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