Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its projected capital spending for this year by 62 percent, a new high, in an attempt to satisfy customer demand for advanced technologies in the production of central processing units, high-performance-computing (HPC) devices and 5G applications.
After investing US$17.24 billion last year, TSMC this year plans to spend US$25 billion to US$28 billion on manufacturing equipment and new facilities, including a fab in the US.
About 80 percent of the budget would be allocated for developing advanced technologies including 3, 5 and 7-nanometer technologies, the company said.
Photo: Hung Yu-fang, Taipei Times
The larger-than-expected capital spending prompted speculation that TSMC might use it to cope with new CPU orders from Intel Corp, rather than demand for smartphone application processors from Apple Inc.
“We don’t comment on specific customers or areas. Our capital expenditure is based on long-term demand and the industry mega-trends of 5G and HPC,” TSMC chief executive officer C.C. Wei (魏哲家) told a virtual investors’ conference yesterday.
CPU, networking and artificial intelligence accelerators would be the main growth drivers in the HPC segment, Wei said.
Intel is expected to outsource production of its new CPU, dubbed Core i3, to TSMC in the second half of this year, using TSMC’s 5-nanometer technology, according to TrendForce Corp (集邦科技).
The US chip giant is also planning to farm out production of mid and high-end CPU to TSMC, starting in the second half of next year, using 3-nanometer technology, the Taipei-based researcher said.
TSMC chairman Mark Liu (劉德音) said that strong demand for 3- and 5-nanometer chips in HPC applications gave the chipmaker confidence to boost capital spending at such a significant rate.
“I think our business was in the past few years driven by smartphones. From this year, HPC is jumping on the bandwagon,” Liu said. “Our 5-nanometer demand is even stronger than we expected three months ago.”
TSMC expects intensive capital spending to accelerate its revenue growth by a compound annual growth rate of 10 to 15 percent from this year to 2025, faster than the chipmaker’s previous estimate of 5 to 10 percent.
This year, revenue would grow about 15 percent annually, outpacing the foundry sector’s growth of 10 percent, Wei said.
The global semiconductor industry’s revenue is forecast to grow 8 percent this year, he said.
Concerning TSMC’s overseas expansion plan, Liu said that construction of the US fab would start this year and take until 2024.
The fab would have an installed capacity of 20,000 wafers per month, Liu said.
The chipmaker is also evaluating the feasibility of setting up a material development center in Japan for 3D ICs, he said.
TSMC yesterday forecast gross margin for this quarter of 50.5 to 52.5 percent, down from 54 percent last quarter, due to slightly lower factory utilization and unfavorable foreign exchange rates.
This quarter, revenue would grow 1.57 to 2.52 percent to US$12.7 billion to US$13 billion, from US$12.68 billion last quarter, the company said.
“Moving into the first quarter of 2021, our business continues to be strong, supported by HPC-related demand, recovery in the automotive segment and a more moderate smartphone seasonality than in recent years,” Wei said.
Demand from the automotive segment is rebounding from a slump last year due to the COVID-19 pandemic, leading to supply constraints of image sensors, power management chips and chips for advanced driver assistance systems, Wei said.
TSMC yesterday reported 23 percent annual net profit growth to NT$142.77 billion (US$5.02 billion) from NT$116.04 billion, setting an all-time high, and a quarterly growth of 4 percent from NT$137.31 billion.
Last year as a whole, net profit soared 50 percent to NT$517.89 billion from NT$345.26 billion in 2019. That translated into earnings per share of NT$19.97, up from NT$13.32 in 2019.
Annual revenue expanded 25.2 percent to NT$1.34 trillion from NT$1.07 trillion, with smartphone applications contributing about half of TSMC’s profit.
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