The COVID-19 pandemic made 2020 a challenging year for the semiconductor industry. Now, in the wake of supply chain disruptions and increased consumer demand, there is a global chip shortage. The world’s leading chipmakers are working hard to expand their manufacturing capacities to help meet the demand going forward.
Tower Semi is one such company. In its fourth-quarter report, the firm announced that it plans to invest $150 million over the next 12 months to expand its manufacturing capacity, Evertiq reports. The investment will be split mainly between four locations, including one in Israel, one in the U.S., and two in Japan.
No one could have predicted what last year held. Likewise, no one could have predicted the surging demand for consumer devices—particularly things like laptops and peripherals that coincide with the worldwide shift to remote work.
Tower Semi’s increased investment, however, is no surprise. The company reportedly projects strong demand from its customers in excess of its current capacity in the 200mm and 300mm spaces.
According to Evertiq, the investment will mainly be devoted to purchasing machinery and other assets to help bolster production. The equipment will begin to impact Tower Semi’s revenue during the second half of 2021 and will take full effect in the first quarter of 2022. After all, boosting manufacturing capacity doesn’t happen overnight.
By acting now, Tower Semi puts itself in a good position moving forward.
Aside from its new $150 million investment, Evertiq reports that the chipmaker renewed the leases for its Japanese facilities through at least 2032. That’s a good sign of Tower Semi’s longevity and outlook on the future. The company has built a strong presence in Japan, both in Tonami and Uozu, and will continue to call those locations home throughout the decade.
Building on Success
While 2020 was a difficult year for companies in every industry, many chipmakers were able to find success thanks to a strong rebound in the third and fourth quarters. That was certainly the case for Tower Semi.
The firm brought in $345 million in Q4 2020, which amounts to a 13 percent increase over the same frame in 2019. Its net profit also increased to $31 million after sitting at $21 million the year prior.
It will be interesting to see how the extraordinary demand this year affects Tower Semi’s operations. Thanks to its investment and increased manufacturing capacity, the chipmaker should be poised for another successful year.