Thu, Apr 19, 2012 - Page 12 News List

TSMC to increase capital expenditure to satisfy demand

By Lisa Wang  /  Staff reporter

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said it plans to raise capital expenditure to more than US$7 billion in an effort to satisfy customers’ strong demand for its advanced 28-nanometer chips.

That is an increase of about 17 percent on an estimate of US$6 billion that TSMC made three months ago.

TSMC’s move followed speculation that constraint in its supply of 28-nanometer chips had prompted clients Nvidia Inc and Qualcomm Inc to look for a second source, such as south Korea’s Samsung Electronics Co, United Microelectronics Co (UMC, 聯電) and Abu Dhabi-funded GlobalFoundries Inc, the contract chip manufacturer that was spun off from Advanced Micro Devices Inc in 2009.

“Yes, we have had some difficulties with 28-nanometer chips, but those difficulties had to do with not having enough capacity, not the yields,” a public relations official cited TSMC chairman and chief executive Morris Chang (張忠謀) as saying at a technology forum in San Jose, California.

The Hsinchu-based company expects to complete 132 tape-outs of 28-nanometer chips for customers this year after finishing 36 at the end of last year, Chang said in January.

In the semiconductor industry, tape-out refers to the final stage of the chip design cycle, before it is sent for manufacturing.

This year, 28-nanometer chips are expected to account for about 10 percent of the company’s total revenues, Chang said in January.

“In 2011, we spent US$7 billion [on new equipment]. This year, we will spend more than the US$7 billion we spent last year,” Chang told customers at yesterday’s forum in the US.

Chang said he would give a precise figure in a few weeks.

The increase in capital spending matched the expectations of Credit Suisse, which upgraded its forecast on TSMC’s capital spending to US$7 billion for this year, allowing the chipmaker to increase its 28-nanometer capacity to 50,000 wafers a month.

That would see 28-nanometer chips make up between 15 percent and 20 percent of TSMC’s revenues by the fourth quarter of this year, Credit Suisse said in a report dated April 10.

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