Taiwan Semiconductor Manufacturing Co. warned that a global shortage of semiconductors across industries from automaking to consumer electronics may extend into 2022, prompting the linchpin chipmaker to lift targets on spending and growth for this year.

The world’s largest contract chipmaker said Thursday that its auto industry clients can expect chip shortages to begin easing next quarter, alleviating some of the supply disruptions that have forced the likes of General Motors Co. and Ford Motor Co. to curtail production. But overall deficits of critical semiconductors will last throughout 2021 and potentially into next year, Chief Executive Officer C.C. Wei told analysts on a conference call.

TSMC now expects investments of about US$30 billion on capacity expansions and upgrades this year, after spending US$8.8 billion in the first three months, Chief Financial Officer Wendell Huang said. The company had previously forecast spending of as much as US$28 billion. Sales in the June quarter may be between US$12.9 billion and US$13.2 billion, beating the average US$12.8 billion seen by analysts, though its target for gross margin came in below expectations at 49.5 per cent to 51.5 per cent. Full-year revenue may climb 20 per cent in dollar terms, ahead of the “mid-teens” growth predicted in January.

“We see the demand continue to be high,” Wei said. “In 2023, I hope we can offer more capacity to support our customers. At that time, we’ll start to see the supply chain tightness release a little bit.”

TSMC joins a growing number of industry giants from Continental AG to Renesas Electronics Corp. and Foxconn Technology Group that warned of longer-than-anticipated deficits thanks to unprecedented demand for everything from cars to game consoles and mobile devices. While Taiwan’s largest chipmaker has kept its fabs running at “over 100 per cent utilization,” the firm doesn’t have enough capacity to satisfy all its customers and it has pledged to invest US$100 billion over the next three years to expand.

Semiconductor shortages are cascading through the global economy. Automakers like Ford, Nissan Motor Co.and Volkswagen AG have already scaled back production, leading to estimates for more than US$60 billion in lost revenue for the industry this year. The situation is likely get worse before it gets better: a rare winter storm in Texas knocked out swaths of U.S. production, while a fire at a key Japan factory will shut the facility for a month. Rival chipmaker Samsung Electronics Co. warned of a “serious imbalance” in the industry.

With major American carmakers and other gadget suppliers facing a prolonged shortage of chips, U.S. President Joe Biden has proposed US$50 billion to bolster semiconductor research and manufacturing at home. The initiative could aid TSMC’s plan to build a cutting-edge fab in Arizona this year that could cost US$12 billion.

TSMC is “happy” to support chip manufacturing in the U.S., though research and development and the majority of production will continue to remain in Taiwan, executives said on Thursday. They reiterated that construction of their plant in Arizona will begin this year.

Net income for the January-March period climbed 19 per cent to NTUS$139.7 billion (US$4.9 billion), beating the average analyst estimate of NTUS$136.2 billion, buoyed by demand for high-performance computing (HPC) equipment and a milder seasonal effect on smartphone demand. Gross margin for the quarter eased to 52.4 per cent from 54 per cent in the three months prior, due in part to relatively lower levels of utilization and exchange-rate fluctuations. First-quarter revenue rose 17 per cent to NTUS$362.4 billion, according to a company statement last week.

The company said Thursday it now expects to be able to achieve the higher end of its compound annual growth rate target of 10 per cent to 15 per cent for the five years to 2025, citing its investment spending plans.

“TSMC’s statement that the chip crunch may spill into 2022 will smooth over concerns that chip demand may fall on overbooking later this year and further boost investors’ confidence in the overall semiconductor demand in the long run,” said Elsa Cheng, an analyst at GF Securities.

Shares of TSMC have more than doubled over the past year. The stock advanced 1.1 per cent on Thursday, before the company reported earnings.

TSMC’s most-advanced technologies continued to account for nearly half of revenue in the March quarter, with 5-nanometer and 7-nanometer processes contributing 14 per cent and 35 per cent of sales, respectively. By business segment, its smartphone business amounted for about 45 per cent of revenue, while HPC increased to more than a third, reflecting sustained demand for devices and internet servers even as economies start to emerge from the pandemic.

“We are seeing stronger engagement with more customers on 5-nm and 3-nm, in fact the engagement is so strong that we have to really prepare the capacity for it,” Wei said. Smartphones and HPC will be the main drivers for demand of 5-nm, which will contribute around 20 per cent of wafer revenue this year.

--With assistance from Vlad Savov, Cindy Wang and Gao Yuan.