TSMC expects a third more 5nm production in 2H 2021

There are chip shortages everywhere and one piece of the puzzle is a lack of foundry capacity. Production on TSMC's latest nodes is pretty much fully booked and that's constraining the ability of various chip makers to meet high consumer demand.

Ramping up production isn't easy, it requires a lot of capital and time. DigiTimes writes TSMC expects to boost its 5nm wafer output by one third in the second half of this year. The Taiwanese foundry's 5nm node pumped out 90,000 wafers a month in Q4 2020. This figure is expected to rise to 105,000 wafers a month in the first half of 2021 and will eventually hit 120,000 wafers monthly in the second half of 2021.

TSMC's 5nm node is used by a variety of large tech firms, including Apple, AMD, and MediaTek. Later this year, AMD is expected to introduce its first Zen 4-based processors, these chips will use TSMC's 5nm process.

New issues on the horizon

But while TSMC is ramping up capacity, the foundry is also facing new issues. Yesterday reports emerged that TSMC is now trucking in water to meet its production needs. Taiwan had an unusually dry rain season and companies are asked to restrict water consumption because water levels at reservoirs have dropped to dangerously low levels.

Chip shortages to get worse... and persist until 2022

On a related note, it appears the chip shortages will be with us a lot longer than most of us hoped. MarketWatch reports analysts predict shortages will remain common throughout 2021 -- if not longer.

We believe semi companies are shipping 10% to 30% BELOW current demand levels and it will take at least 3-4 quarters for supply to catch up with demand and then another 1-2 quarters for inventories at customers/distribution channels to be replenished back to normal levels.” - J.P. Morgan analyst Harlan Sur

At least in the short term, it doesn't seem like we should expect improvement. In fact, it looks like shortages will get worse as we head into the Spring season.