TSMC soars 10% after beating earnings and announcing $44 billion plan to combat chip shortages

• Taiwan Semiconductor surged as much as 10% on Thursday after its fourth-quarter earnings beat estimates.
• The chip giant also announced plans to invest $44 billion in manufacturing in 2022.
• The ramp-up in production comes as supply chain disruptions still impact the chip industry.
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Taiwan Semiconductor stock soared as much as 10% on Thursday after the chip manufacturer reported strong fourth-quarter earnings and announced plans to invest up to $44 billion in 2022.

The company reported Q4 earnings per share of $1.15, beating estimates by $0.04. Revenue grew 24% year-over-year to $15.7 billion in the quarter, also topping views. CFO Wendell Huang said “strong demand for our industry-leading 5-nanometer technology” contributed to the gains.

The solid results from TSMC come as supply chain disruptions in the semiconductor space impact various end markets like automobiles, video game consoles, and major appliances.  

TSMC is earmarking $40 billion to $44 billion for capital spending in 2022, representing an almost 50% jump from its previous record annual spend of $30 billion in 2021. The company previously said it expects to invest $100 billion through 2023 to expand its manufacturing capacity. 

The expansion should help alleviate the ongoing supply chain disruptions, which in turn could help tame rising prices as a surge in supply of goods materializes. But it could still take time for the supply of chips to catch up to the rising demand, according to comments made by TSMC CEO C.C. Wei.

Wei said the ongoing chip crunch “may or may not persist” in 2022. But while some sectors, like smartphones, could see a drop in demand for semiconductors, TSMC expects that to offset by rising demand from other industries like autonomous driving vehicles, 5G, and artificial intelligence.