Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said it was likely to increase capital spending again this year from a record-high of US$4.8 billion to match the pace of a faster-than-expected recovery in demand for electronics products across the board.
TSMC started increasing capital expenditures in September last year when it detected that a swift rebound was causing capacity constraints, bringing last year’s capital spending to US$2.7 billion in total, almost double the originally planned US$1.5 billion, chairman Morris Chang (張忠謀) told a TSMC technology symposium in Hsinchu.
“This is a dramatic move,” Chang said.
In January, TSMC said it planned to expand capital spending by about 77 percent year-on-year to US$4.8 billion this year to meet growing demand.
“We are still in the process of accelerating our capital spending. I’m afraid the figure will exceed the budgeted US$4.8 billion,” Chang said.
He declined to reveal how much the increase could be.
In April, the company told investors that demand had surpassed what it could supply by 30 percent to 40 percent in terms of chips made on advanced technologies.
“Given tight foundry capacity in the near-term and the longer lead-time at fabless companies this year, some companies who didn’t plan their capacity allocation well will suffer loss of market share,” Jonah Cheng (程正樺), a chip industry analyst with UBS Securities Pte Ltd’s Taiwan branch, told a media briefing yesterday in Taipei.
It will be TSMC’s strategy to have 10 percent to 15 percent more capacity than orders require, as that would allow the chipmaker to have the ability to cope with any unexpected increase in demand, Chang said.
He said that, along with its customers, TSMC would take 20 percent of the US$260 billion global chip market this year by enhancing the business model invented 20 years ago by the company — TSMC focused on making chips, while its customers sold products that they powered.
“I think IDMs [integrated device manufacturers] have plans to reduce research and development spending, as well as capital expenditure,” Chang said in response to a reporter’s question about whether IDMs had increased the pace of outsourcing to contract chipmakers.
Separately, local chip tester and packager Siliconware Precision Industries Co (矽品精密) yesterday raised its spending on new equipment by about 45 percent to NT$21 billion (US$654 million) from NT$14.3 billion to NT$14.5 billion previously planned.
The expansion was bigger than the 30 percent increase the company announced earlier this month, almost four times the NT$5.5 billion it spent last year.
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