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Semiconductors

TSMC to invest $2.8bn in China to ramp up auto chip production

Taiwan chip giant will build new facilities in Nanjing amid severe shortage

TSMC plans to invest in building a factory to produce 28-nanometer chips in Nanjing. (Photo courtesy of the company)

TAIPEI -- Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, will invest $2.8 billion in China to ramp up the production of semiconductors used in automobiles.

TSMC will install new production lines at an existing plant in Nanjing, which are slated to begin mass-production in 2023 to meet the growing demand for 28-nanometer automotive chips.

This is the company's first major investment in mainland China since it announced the construction of the Nanjing plant in 2015. Although the company has not revealed details, the new lines are expected to have a monthly production capacity of 40,000 wafers.

TSMC hopes to start limited production using the new facilities by the second half of 2022.

Compared with the cutting-edge 5-nanometer chips that TSMC currently produces in Taiwan for smartphones, 28-nanometer chips use technology that is several generations old.

However, the 28-nanometer chip is critical to auto production and is one of the types that are in severe shortage worldwide. Unable to secure enough of these chips, automakers around the world from Ford Motor to Honda Motor have been forced to scale back production.

Demand for computers, monitors and other digital equipment also remains strong as more people work from home due to the coronavirus pandemic, exacerbating the situation.

Earlier this month, TSMC CEO C.C. Wei told investors that the current semiconductor shortage "will continue throughout this year" and may not be resolved until around 2023.

The Chinese investment is part of a larger push by TSMC to increase output. The company last year also decided to build an advanced chip plant in Arizona.

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