Tech

TSMC spends record $ 28 billion on advanced chips and capacity

Taiwan Semiconductor Manufacturing Co., Ltd.

TSM -3.07%

Apple’s leading chip supplier, will spend more than ever on developing advanced chips and building plant capacity, taking advantage of the surge in semiconductor demand that has led to global supply shortages.

The world’s largest contract chip maker will raise capital spending from $ 25 billion to $ 28 billion in 2021, with executives announcing at least a 47% year-on-year increase in earnings announcements Thursday.

Brett Simpson, a partner at London-based technology research firm Arete Research, said: “This is a signal of what they think of the economic recovery and their confidence in long-term growth.”

TSMC also reported record quarterly earnings and net income on Thursday. This is underpinned by the high demand from 5G phones and the growing use of electronics needed for remote work during the Covid-19 pandemic.

Net income increased to NT $ 142.77 billion, equivalent to NT $ 5.1 billion, up 23% year-on-year, and analysts surveyed by S & P Global Market Intelligence reported net income of NT $ 136.69 billion. It exceeded my expectations.

Mr Simpson said TSMC’s announcement of investment plans could help alleviate concerns about inadequate semiconductor supplies.

As auto and electronics manufacturers demand more chips, suppliers are reaching their current capacity limits and some companies are investing in expansion. TSMC said it needs to focus on capital investment to seize growth opportunities from key trends such as 5G and more focused computing hardware.

As a result of the shortage, consumers may see more expensive or delayed items such as laptops and cars. The shortage of supplies is confusing to automakers who need such parts to power functions from braking to emission control.

Mark Liu, chairman of TSMC, said he hopes high performance computing will overtake smartphones and become a major growth driver in the coming years. Although the pandemic helped increase chip demand, the company expects to continue rolling out the Covid-19 vaccine as customers begin to seek to secure their supply through increased inventories.

TSMC said it expects to generate $ 12.7 billion to $ 13 billion in revenue this quarter. The company’s January-March 2020 revenue was $ 10.3 billion.

TSMC manufactures advanced semiconductors for many companies designing chips such as Apple and Qualcomm. Co., Ltd.

And nvidia Co., Ltd.

Intel Co., Ltd.

According to someone familiar with the matter, they are negotiating with TSMC to further outsource the production of some of the advanced chips. Intel announced on Wednesday that its CEO, Bob Swan, will be replaced after lagging behind its competitors.

Globalfoundries Inc, based in the United States, another major contract chip maker. Has doubled its capital investment this year compared to 2020 to increase capacity, said Mike Hogan, senior vice president of the company, which oversees automotive and industrial chip manufacturing.

Last year, TSMC announced plans to open a $ 12 billion manufacturing plant in Arizona. On Thursday’s phone call, Mr Liu said the company is still aiming to build it to that scale, but further progress will depend on economic and local support.

The company also said it plans to continue expanding the production capacity of Nanjing Fab in eastern China, although its share of revenue from Chinese customers declined in the fourth quarter. China accounted for 6% of TSMC’s revenue in the fourth quarter, down from 22% in the third quarter. In July, TSMC issued Huawei Technologies Co. After September 14 due to US trade restrictions restricting the use of US semiconductor manufacturing equipment by Chinese tech giants. Announced that it will not ship wafers to.

Write to Stephanie Yang at stephanie.yang@wsj.com and Yang Jie at jie.yang@wsj.com

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TSMC spends record $ 28 billion on advanced chips and capacity

Source link TSMC spends record $ 28 billion on advanced chips and capacity

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