How much capacity does Taiwan Semiconductor Manufacturing Company need? The world's biggest contract chipmaker is already planning to spend $4.8bn this year on capacity expansion.

The answer, according to Morris Chang, chairman and chief executive, is a lot more still.

The chipmaking industry, Mr Chang told clients yesterday, oscillates between two states of imbalance – either demand outstrips supply, or vice versa. “In the 50-odd years that I've been in this industry I've found that a perfect balance between supply and demand is something you can only happen upon, rather than strive for,” he said. Between the two states of imbalance, TSMC “would rather choose to have too much capacity than the other way around”, he said, adding he preferred “a 10 to 15 per cent reserve in capacity ... to handle sudden jumps in demand”.