Tue, Mar 20, 2012 - Page 12 News List

TSMC to boost capital expenditure to cope with demand

RISING DEMAND:The world’s largest contract chipmaker is set to grow faster, mainly because of higher demand for mobile devices, including smartphones and tablets

By Kevin Chen  /  Staff Reporter

Capital expenditure (capex) at the world’s largest contract chipmaker this year is likely to increase from the US$6 billion level it set in January to cope with rising customer demand for chips using 28 nanometer (nm) technology, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday.

Meanwhile, Credit Suisse yesterday said TSMC would ramp up production at its 28nm plants and it predicted the chipmaker would raise its capex to US$7 billion this year.

“It is possible to adjust [this year’s] capital expenditure, but [it] still needs careful analysis,” local cable TV network UBN yesterday quoted TSMC chairman and CEO Morris Chang (張忠謀) as saying.

Chang did not comment on the size of the potential capex increase. TSMC is likely to offer more details on April 26, when the Hsinchu-based company is scheduled to hold its quarterly conference for investors, according to the company’s public relations department.

FULLY BOOKED

Chang’s remark came after the Chinese-language Economic Daily News reported that TSMC would likely boost its capex to US$6.8 billion this year, as the company needs to build up additional capacity at a time when its 28nm production is fully booked.

“We have seen customers queue up for our 28nm products, but not our 40nm products,” UBN network quoted Chang as saying.

Credit Suisse analyst Randy Abrams said in a report released yesterday that rising demand for mobile, graphics and FPGA chips has led customers to line up for TSMC’s 28nm capacity.

TSMC’s potential hike in this year’s capital investment came just two months after the company announced it was cutting it by nearly 18 percent from last year’s record high of US$7.29 billion because of negative global conditions.

However, Chang yesterday remained cautious about the global economic outlook and maintained his January forecast that global semiconductor revenues would grow 2 percent this year from last year.

He added that TSMC would grow at a faster pace mainly because of higher demand for mobile devices, such as smartphones and tablets.

In January, Chang said he expected 28nm technology chips to account for 10 percent of the company’s total revenues by the end of the year, up from about 5 percent in the first quarter.

MORE OPTIMISTIC

However, Credit Suisse seemed to be more optimistic about TSMC’s prospects.

“We expect 28nm to ramp up much faster than 40nm, and revenue contribution to reach 17 percent of total revenue by the fourth quarter, compared with 5 percent in the first quarter,” Abrams wrote in the report.

He also revised upward its second-quarter sales estimate for TSMC to NT$105 billion (US$3.56 billion), up 16 percent quarter-on-quarter. That compared with his previous estimate of an increase of 10 percent quarter-on-quarter to NT$98 billion.

TSMC shares closed 3.21 percent higher at NT$83.7, the highest close in nearly 10 years, on the Taiwan Stock Exchange, while the TAIEX dropped 0.14 percent.

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