Taiwan Semiconductor Manufacturing Company will spend US$8 billion to boost capacity as chip designers scramble for parts.

Investment to curb 28nm chip shortage

One of the world’s largest third-party chipmakers, Taiwan’s TSMC, is to boost investment in cutting-edge manufacturing in order to meet unexpected demand.

If your name isn’t Intel, technology firms from mobile phone chip designers Qualcomm through to graphics chip designers Nvidia, all need to partner with chipmaker foundries to get products onto the market.

While it’s not quite up to Intel’s 22nm process, TSMC’s 28nm capability has been a major hit with chip designers. Smaller fabrication technology means smaller, cheaper chips that run faster and cooler – particularly important for the all-in-one SoC chips in mobile phones.

Nvidia have also credited TSMCs’ "first-generation high-K metal gate (HKMG) technology and second generation SiGe (Silicon Germanium) straining" as contributing to the efficiency of the firm’s recently launched Kepler graphics architecture.

Yet TSMC has struggled with capacity. Such is the scale of the shortage that Qualcomm and Nvidia are both said to be exploring partnerships with other foundries to avoid product shortages. Apple have also been trialling processor manufacture on the same TSMC process, given their falling out with rival Samsung. Raising the prospect of smaller chip designers having to compete with Apple’s mammoth appetite as well.

TSMC boss Morris Chang said that TSCM and the firm’s clients had "underestimated demand" which is a bit like passing the buck given that Qualcomm, at least, knew full well that demand for the firm’s mobile phone superchip, the Snapdragon S4, would be running hot.

The chip giant isn’t exactly sitting on their hands though. According to a DigiTimes report, the company is now set to outspend rival Korean chip maker Samsung’s investment in 2012, raising the 2012 capex from a hefty US$6 million to an even more mighty US$8-8.5 billion.

TSMC is planning on boosting the roll out of increased 28nm capacity as well as converting some of the firm’s aging 65nm process to newer technology. Chang said that shortages shouldn’t be a problem by 2013.

By 2014, TSMC will begin production of the next generation 20nm process.

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