A plan by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to expand its advanced process capacity is necessary if the company is to maintain its lead over rival Samsung Electronics Co, Grand Cathay Securities (大華證券) said yesterday.
“TSMC currently enjoys a lead over Samsung by about one year in the 28-nanometer [nm] technology process,” Grand Cathay analyst Meissen Chang said.
“Facing an aggressive rival like Samsung, TSMC needs to spend a lot if it wants to keep its lead and preserve its global status,” Chang said, referring to the company’s newly announced massive spending plan.
TSMC, the world’s largest contract chipmaker, announced a day earlier that its board of directors has approved a plan to assign NT$71.75 billion (US$2.39 billion) to expand and upgrade its advanced technology capacity.
The board also agreed that the company would appropriate an additional NT$11.29 billion to build a new plant and install production facilities.
“There is no doubt that TSMC will use the massive funding to sharpen its technology in the 28nm and 20nm processes, and even beyond,” Chang said. “On expectations of rising demand for mobile devices, TSMC is gearing up to expand.”
“It is expected that TSMC will unveil chips on the 20nm process next year in a bid to profit by riding the wave of rising demand for high-end chips,” he said.
In addition to maintaining its lead over Samsung, Chang said, TSMC will also have to play catch-up to narrow its gap with US-based Intel Corp, which commands a lead over the Taiwanese firm by nine months to 12 months in the 20nm process.
In the second quarter of this year, chips made using the 28nm process accounted for 7 percent of TSMC’s total sales, while chips made using the 40nm and 65nm processes made up 28 percent and 26 percent of sales respectively.
TSMC expects shipments of chips made using the 28nm process to double in the third quarter from the second quarter.
Meanwhile, TSMC’s board of directors has recognized the company’s first-half results, which show a net profit rise of 4.2 percent from a year earlier to NT$75.29 billion, with earnings per share of NT$2.9, and sales growth of 8.2 percent year-on-year to NT$233.57 billion.
In the six-month period, TSMC’s gross margin stood at 48.2 percent, the company said.