The largest contract manufacturer of semiconductors, Taiwan Semiconductor Manufacturing Company (TSMC), is forecasting a gross profit margin of more than 50 percent over the longer term.

The company is signaling so clearly that the shortage of semiconductors will not be resolved quickly.

TSMC also justified the expected high margin with the fact that customers are willing to pay higher prices for computer chips.

The company expects a very tight production capacity this and through the whole of next year, said TSMC boss C. C. Wei.

Patrick Welter

Correspondent for business and politics in Japan, based in Tokyo.

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For the third quarter from July to September, TSMC reported a margin of 156.26 billion Taiwan dollars (4.8 billion euros), 13.8 percent more than a year ago.

Sales rose 16.3 percent to 414.7 billion Taiwan dollars.

TSMC is forecasting a 24 percent increase in sales for the year as a whole.

The demand for smartphones and computers has weakened, admitted TSMC.

Wei justified this with the shortage of components.

The chip manufacturer sees itself better positioned than before for a possible correction of its customers' warehousing.

The number of semiconductors in electronic devices is increasing in the long term.

TSMC builds first factory in Japan

The company announced that it would establish its first chip factory in Japan. TSMC has received strong support from the government and its customers, Wei said. With the investment, the company is following a request from the Japanese government, which would like to better secure the supply of semiconductors. Prime Minister Fumio Kishida told journalists that the government would provide financial support to TSMC in the supplementary budget.

The factory in Japan is expected to be built from 2022 and start production in 2024. TSMC wants to manufacture semiconductors of the mature 22 to 28 nanometer technology in Japan, which are currently particularly scarce. The company is still silent about the investment volume. In Japan there is talk of the equivalent of around 7.6 billion euros. CFO Wendell Huang signaled openness to a joint venture. According to Japanese media reports, electronics company Sony and auto supplier Denso are potential investment partners.

TSMC has concentrated most of its production in Taiwan, but operates a factory in China, is building a state-of-the-art facility in America, and is considering investing in Germany.

The company is under pressure to do more to address the shortage of semiconductors for the automotive industry.

Wei emphasized that the pandemic in Southeast Asia recently hampered the delivery of chips for cars.

TSMC only has a market share of around 15 percent in this segment.

"We cannot solve the supply chain challenges for the entire industry," said Wei.