Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday said it would boost its research-and-development (R&D) budget by 25 percent this year as part of an effort to satisfy customer demand amid strong rebound in electronic products.
TSMC planned to allocate NT$27 billion (US$849 million) on R&D spending this year, compared with NT$21.6 billion budgeted for last year, TSMC chairman Morris Chang (張忠謀) told an economic forum arranged by the Chinese-language CommonWealth magazine in Taipei.
Last month, Chang said the company was on track to allocate 7 percent of its revenues from last year and this year to R&D spending, up from 6 percent in 2008.
To safeguard the company’s lead in the chipmaking industry and to secure an early recovery, “we need to keep spending on R&D even when the economy is not in good shape,” Chang said.
“The most important thing for enterprises during an economic downturn is not to spare every penny, but to maintain vigor and enhance self-competitiveness,” he said.
Chang said he has seen that end demand for information-technology (IT) products has rebounded strongly since the third quarter of last year, which bodes well for this year and next year.
TSMC yesterday also said it was expanding capacity to make chips on advanced technologies to meet the recent spike in customer demand.
The capacity expansion plans came after end demand for electronics bounced back strongly because of the improving global economy, which tightened the supply of PC and TV chips made with leading-edge technologies.
Meanwhile, the company yesterday held a topping-off ceremony in Hsinchu for Phase 5 of its mega 12-inch plant, or Fab 12. TSMC plans to begin construction of another 12-inch plant in Tainan.
“TSMC needs to ratchet up leading-edge capacity to catch up demand after six months of tight supply and compensate for lower 40 nanometer yields,” Credit Suisse analyst Randy Abrams said in a report issued yesterday.
Leading-edge utilization has been full since the middle of the third quarter of last year and extending into this year on the back of rebounding demand for PCs, TVs and handsets, Abrams said.
To match customer demand, the company plans to move new equipment to the Tainan plant by the end of this year following the groundbreaking ceremony scheduled for the end of the Lunar New Year holidays, a company statement said.
“The topping [off] of our Fab 12, Phase 5 facility, and our plans to rapidly move in equipment and begin volume production there in the third quarter of this year is another example of our competitiveness in providing steadfast support for customers,” Mark Liu (劉德音), TSMC senior vice president of operations, said in the statement.
The rapid expansion in capacity aimed to satisfy recent increases in customer demand, Liu said.
Phase 5 of Fab 12 will also serve as the base for R&D of advanced 22-nanometer and new-generation process technologies, TSMC said.
Currently, TSMC is conducting R&D for 28-nanometer and 22-nanometer process technologies at its Fab 12, Phase 1 and 2 facilities, and will hand 28-nanometer technology to the Phase 5 facility for volume production in the fourth quarter of this year.
Credit Suisse forecast that TSMC would hike its capital spending by nearly 50 percent this year to US$4 billion from US$2.7 billion budgeted for last year.
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