The board of Taiwan Semiconductor Manufacturing Co has approved a plan to spend $2.89 billion to increase chip foundry capacity.

The investment is “for the purpose of installing mature technology capacity," and comes amid a lengthy global semiconductor shortage.

TSMC Fab 5
– Wikimedia Commons/Peellden

The immediate focus on mature tech follows supply issues with mature chip customers, particularly automotive manufacturers.

Car companies have repeatedly idled plants due to the chip shortage, with Jaguar last week joining rivals in reducing production.

“We are being told from the suppliers and within the Volkswagen Group that we need to face considerable challenges in the second quarter, probably more challenging than the first quarter,” Wayne Griffiths, president of VW’s Spanish brand, told the Financial Times this week.

The company said that it expected output to fall by 100,000 vehicles in the first quarter of 2021 due to the shortage.

Chip manufacturers are spending heavily to increase supply: TSMC plans to invest $30bn this year, and $100bn over three years, while SK Hynix will spend $106.35bn on a fab campus.

But - with such facilities taking years to set up - TSMC, Intel, and Nvidia have warned that the chip shortage could last years.