Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its capital spending by up to 40 percent for this year to US$15 billion and said it would maintain the record-high budget next year as faster 5G network deployment and higher smartphone penetration continue to fuel demand for its most advanced technologies.
TSMC has decided to add about US$4 billion in spending, with more than half of the amount to be spent on boosting its 5-nanometer capacity and the remainder for 7-nanometer chip production, said the company, which counts Apple Inc and Huawei Technologies Co’s (華為) chip design arm, Hisilicon Technologies Co (海思半導體), as its top clients.
The company said 5-nanometer technology is more expensive than its previous technology nodes, given its extensive use of high-cost extreme ultraviolet (EUV) tools in mass production, which is to begin in the first half of next year.
Photo: CNA
TSMC originally planned to spend US$10 billion to U$11 billion on new equipment this year.
“We are more optimistic than six months ago…. We are now more aggressive about 5-nanometer capacity buildup,” chief executive officer C.C. Wei (魏哲家) told investors. “Some global [telecom] carriers have accelerated their 5G deployment. We did not see that momentum six months ago.”
“We can see [5G] momentum continuing to grow. Compared with our estimate, the momentum has almost doubled,” Wei said.
TSMC also adjusted upward its 5G smartphone penetration forecast to about 15 percent for next year, compared with an earlier estimate of single-digit percentage.
5G smartphones consume more chips than 4G smartphones due to increasing functionality and additional ICs for more cameras and power management ICs among others, it said.
The acceleration of 5G development, mostly for 5G-enabled phones and networking devices, boosted the company’s net profit by 13.5 percent to NT$101.07 billion (US$3.29 billion) last quarter, compared with NT$89.07 billion a year earlier. Earnings per share rose to NT$3.9 from NT$3.44.
On a quarterly basis, net profit surged 51.4 percent from NT$66.77 billion, or EPS of NT$2.57.
TSMC expects revenue to grow about 9 percent quarter-on-quarter to between US$10.2 billion and US$10.3 billion this quarter from US$9.4 billion last quarter.
The growth is driven mainly by strong demand from smartphones and high-performance computing devices, such as networking, graphics processing units and cryptocurrency mining machines.
Gross margin is forecast to climb to between 48 and 50 percent this quarter, from 47.6 percent last quarter, the company said.
For the whole of this year, TSMC expects revenue to edge up 1.02 percent to about US$34.55 billion, compared with US$34.2 billion last year.
The company is expected to still outgrow its peers, as the world semiconductor and foundry segment are forecast to see a low-single-digit percentage decline in revenue this year, it said.
TSMC retained its long-term goal of growing revenue and net profit by a compound annual growth rate of 5 to 10 percent.
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