TAIPEI (Taiwan News) — Taiwan’s semiconductor production is forecast to have grown by more than 25% this year to reach a historic high amid the ongoing global chip crunch.

Chip output for 2021 is expected to have increased by 25.9% to NT$4.1 trillion (US$147 billion), Nikkei cited government think tank the Industry, Science, and Technology International Strategy Center (ISTI) as saying. The ISTI added that semiconductor production next year is also expected to grow to around NT$4.5 trillion, on the back of strong demand for advanced chips.

The chip industry has continued to see demand outpacing supply, even as manufacturers invest in new capacity, per Nikkei. The silicon shortage is predicted to continue into 2022, according to the report.

One of the main issues affecting supply is the availability of upstream materials such as 300mm silicon wafers for advanced chips. A shortage of these key materials could lead to manufacturing bottlenecks in 2022, analysts told Nikkei.

Taiwan’s Ministry of Economic Affairs held a joint seminar with Japan’s Mizuho Bank in Taipei last Thursday (Nov. 25) to encourage more Japanese investment in Taiwan, Nikkei said. The majority of semiconductor manufacturing equipment and materials used in Taiwan come from Japan.

Taiwan Semiconductor Manufacturing Co. called on Japanese suppliers to invest in production of gases and liquid materials for the domestic chip industry.

Deputy Minister of Economic Affairs Chen Chern-chyi (陳正祺) said, “We especially value our relationship with Japan.”