TSMC said its profits are set to rise amid new factories and a global chip shortage. Photo: Handout

Shares in Taiwan’s microchip giant TSMC soared on Friday as it forecasted posting better-than-expected profits for the rest of the year and following the announcement of plans to build its first factory in Japan. 

The world is in the midst of a severe shortage of silicon microchips that are used in everything from cars and missiles to phones and games consoles.

Taiwan Semiconductor Manufacturing Company (TSMC) operates the world’s largest silicon wafer factories and produces some of the smallest – and most advanced – microchips.

On Thursday the tech giant said it expected as much as US$15.7 billion in revenue for the fourth quarter, higher than analyst estimates, as demand for chips remained strong. 

Net income in the third quarter rose a forecast-topping 14% to $5.6 billion.

The news was music to the ears of investors, with TSMC’s share price rising more than 4.5% in morning trade in Taipei.

TSMC’s factories are already operating at full capacity and the company warned production will likely remain stretched next year.

“We expect TSMC’s capacity to remain very tight in 2021 and throughout 2022,” Chief Executive Officer CC Wei said on a conference call. 

“While the short-term imbalances may or may not persist, we believe our technology leadership will enable TSMC to capture the strong demand for our advanced and specialty technologies,” he added.

With so much of TSMC’s production concentrated in Taiwan, many countries have been wooing the company to build foundries in their territories.

The company has already pumped billions into building a state-of-the-art foundry in Arizona and on Thursday said it would construct its first factory in Japan.

Work will begin next year and is being part financed by the Japanese government with hopes the plant will start producing chips by late 2024. 

Japan’s Prime Minister Fumio Kishida told a news conference Thursday evening that the deal would “improve the independence of our country’s semiconductor industry and contribute considerably to our economic security.”

“We will add support for TSMC’s large-scale private investment to our economic plans,” Kishida added. 

Bloomberg News contributed to this story.