Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) plans to allocate a larger portion, or about 9 percent, of its total revenue this year to research and development (R&D) on cutting-edge technologies to safeguard its technological lead amid intensifying competition, the chipmaker’s annual report said.
That could bring TSMC’s R&D budget to more than NT$110 billion (US$3.65 billion) if it reaches its goal of growing revenue by more than 15 percent annually this year — to at least NT$1.23 trillion.
This year’s spending would be a 20 percent increase over last year’s record-high R&D expenditure of NT$91.42 billion.
Photo: EPA-EFE
The bulk, or 70 percent, of this year’s R&D budget is to be spent on advanced technologies, including the 3 nanometer (nm) technology platform and applications, next-generation technologies and 3D IC for system-in-package modules, the report said.
TSMC, a pioneer in the semiconductor industry, said that it began R&D on 2nm technology last year, as it targets 5G-related applications and high-performance-computing devices.
“To maintain and strengthen TSMC’s technology leadership, the company plans to continue investing heavily in R&D,” the report said.
“The markets for TSMC’s foundry services are highly competitive. TSMC competes with other foundry service providers, as well as with a number of integrated device manufacturers,” the company said, referring to the competition it faces.
If TSMC is unable to effectively take on these new and aggressive competitors when it comes to technology, manufacturing capacity, product quality and customer satisfaction, it risks losing customers to these new contenders, the report said.
TSMC, which commands a 52 percent share of the world’s foundry market, competes primarily with Samsung Electronics Co for advanced technology orders, while its Chinese rival Semiconductor Manufacturing International Corp (SMIC, 中芯) is positioning itself to take a bite out of TSMC’s share in China.
TSMC last week said that it plans to increase production of 3nm technology in the second half of 2022, which would make it the foremost foundry offering the technology.
The chipmaker’s report also warned of possible negative effects resulting from the COVID-19 pandemic, saying that the coronavirus might interrupt the global semiconductor supply chain and disrupt some of its suppliers.
There could be downward adjustments in customer demand or production delays for TSMC products, due to forced closures, or partial operations, at factories and offices, the report said.
Due to fallout from the pandemic, the chipmaker expects the global semiconductor industry to see stagnant revenue this year, at best, it said, adding that the industry is expected to grow at a compound annual growth rate of 5 percent between last year and 2024.
The chipmaker also disclosed that company chairman Mark Liu (劉德音) and CEO C.C. Wei (魏哲家) received NT$293 million in compensation apiece last year, accounting for 0.085 percent of net profits last year, the report showed.
Last year, the company paid NT$1.545 billion in compensation to its high-ranking executives.
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
MARKET FACTORS: Navitas Semiconductor Inc said that Powerchip is to take over from TSMC as its supplier of high-voltage gallium nitride chips Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday in a statement said that it would phase out its compound semiconductor gallium nitride (GaN) business over the next two years, citing market dynamics. The decision would not affect its financial targets announced previously, the world’s biggest contract chipmaker said. “We are working closely with our customers to ensure a smooth transition and remain committed to meeting their needs during this period,” it said. “Our focus continues to be on delivering sustained value to our partners and the market.” TSMC’s latest move came unexpectedly, as the chipmaker had said in its annual report that it has
Rick Cassidy, the chairman of Taiwan Semiconductor Manufacturing Co's (TSMC, 台積電) US subsidiary, TSMC Arizona Corp, plans to retire, but the company has yet to name a successor. After Cassidy made his intention to retire known, TSMC Arizona held a special general meeting and approved a resolution that Cassidy would not continue as chairman and would not remain as a director, TSMC said in a statement filed with the Taiwan Stock Exchange last night. The meeting also approved a plan to appoint TSMC Arizona president Rose Castanares as a director, the company said, adding that Cassidy has been named as an advisor
SECURITY WARNING: The company possesses key 3-nanometer technology, and Taiwan should prevent it from being transferred to China, a lawmaker said The Ministry of Economic Affairs yesterday said it would conduct a “strict review” of any proposed acquisition of Taiwanese tech company Source Photonics Co (索爾思光電), following media reports that a Chinese firm was planning to buy the company in the Hsinchu Science Park (新竹科學園區). Local media reported that Suzhou Dongshan Precision Manufacturing Co (東山精密), China’s largest printed circuit board manufacturer, had announced plans to acquire Source Photonics for 5.9 billion yuan (US$823.1 million). The ministry said it has not received an application from Source Photonics and has formally notified the company that any buyout would constitute a change in its ownership structure. The