Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is in talks to buy equipment from European and Japanese chipmakers in a move that may lead to more orders from those clients, BNP Paribas SA wrote in a note yesterday.
On the same day, the world’s largest custom-chip maker said in exchange filings that it bought a total of NT$2.85 billion of equipment from two suppliers. The Hsinchu-based company bought NT$2.15 billion from United Integrated Services Co (漢唐集成公司) and NT$696 million from Organo Technology Co (奧璐佳瑙科技公司), the filings said.
Tzeng Jin-hao (曾晉皓), deputy spokesman for Hsinchu-based TSMC, declined to comment on the BNP report.
Buying equipment from clients may allow TSMC, the world’s largest maker of made-to-order chips, to obtain gear more cheaply and quickly than ordering from equipment makers and give it access to a wider range of manufacturing technologies.
Clients may choose to end manufacturing and outsource to TSMC to avoid the cost of buying equipment for more advanced chip making.
“TSMC aims to expand its market share/scale, and widen its IP portfolio, for the coming 20 nanometer process, through these acquisitions,” the analysts Eric Chen (陳慧明) and Tapan Joshi wrote without saying where they got the information or identifying the companies.
“This could be a win-win situation for both TSMC and the non-profitable IDMs [integrated device manufacturers], as the barrier for [the] below-40 nanometer process is very high,” they wrote.
A nanometer measures the size of connections within a chip, with smaller metrics being more advanced and allowing manufacturers to make more chips more efficiently per wafer. IDMs both design and manufacture their own chips.
TSMC chairman Morris Chang (張忠謀) on Jan. 28 said the company will spend a record US$4.8 billion on factories and equipment this year as the industry rebounds from the global recession.
Chang raised his outlook for the global chip industry to 22 percent revenue growth for this year, from an earlier forecast of 18 percent, and predicted industry sales will rise 7 percent next year, Tzeng said in an April 14 conference call with reporters.
Meanwhile, TSMC’s dominant market position in the world’s foundry business, as well as its strong profitability, cash flow and conservative capitalization, have retained an “A+” long-term corporate credit rating by Standard & Poor’s, with a stable outlook.
“We believe that TSMC will be able to maintain its solid market position as the world’s largest semiconductor foundry service provider over the next two to three years,” Frank Fan (范維康), credit analyst at Standard & Poor’s Ratings Services, said in a statement yesterday.
TSMC enjoyed a market share of as much as 48 percent as of Dec. 31 last year, which is threefold that of its closest rival, United Microelectronics Co (UMC, 聯電).
S&P said the stable outlook indicated that TSMC’s leading market position and modest financial risk profile would continue to provide good support for the “A+” rating, despite the risks of high cyclicality, capital intensity and rapid technological changes that are commonly associated with the semiconductor industry.
ADDITIONAL REPORTING BY KEVIN CHEN
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