Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised this year’s capital expenditure to a record US$30 billion, as demand for advanced chips used in high-performance-computing (HPC) applications is stronger than last quarter.
The figure surpasses the chipmaker’s allocation in January of US$25 billion to US$28 billion. The investment is part of a three-year US$100 billion capital expansion plan that TSMC unveiled earlier this month.
“As we enter a period of higher growth, underpinned by the multiple years of structural mega-trends of 5G-related and HPC applications, we believe a higher level of capital investment is necessary to capture the future growth opportunities,” TSMC vice president and chief financial officer Wendell Huang (黃仁昭) told a conference call with investors.
Photo: Ann Wang, Reuters
About 80 percent of the capital budget is to be spent on the buildup of advanced technologies — including 3, 5 and 7-nanometer technologies — while about 10 percent would be for less-advanced technologies, Huang said.
“We are seeing stronger engagement with more customers on 5-nanometer and 3-nanometer technologies. The engagement is so strong that we need to really prepare the capacity for it — that is the main reason,” TSMC chief executive officer C.C. Wei (魏哲家) said.
Nearly all of the company’s customers build higher levels of inventory as geopolitical tensions persist, while the COVID-19 pandemic still poses uncertainty to chip supply, Wei said.
Asked whether overbooking is a factor behind the supply-demand imbalance, Wei said that the chipmaker “cannot rule out the possibility of inventory correction, or overbooking. But, actually, we expect structural growth to continue.”
TSMC also sees increasing demand for production outsourcing from customers who make some of their chips in-house, such as Intel Corp.
Overall, chip supply constraints are to continue through this year and might go into next year, Wei said.
However, an auto chip shortage would “greatly” improve next quarter, as TSMC has allocated wafer capacity to prioritize auto chip production, he said.
Addressing investors’ concerns that the record capital expenditure would increase capital intensity, Huang said the capital-to-revenue ratio would return to about 35 percent over the long term.
However, the investment would fuel revenue growth at an annual compound growth rate of 10 to 15 percent over the five years to 2025, he said.
Huang said that he believes the company’s long-term goal of keeping gross margin at 50 percent is attainable.
The company forecast revenue growth of 20 percent for this year, revised upward from its January estimate of 15 percent.
“I hold a neutral-to-positive view of TSMC’s forecast and its overall comments during the conference, as long as supply constraints will be in place over the next 18 months,” Cornucopia Capital Partner Ltd (聚芯資本) managing partner Eric Chen (陳慧明) said by telephone.
However, gross margin would be worth tracking over the coming quarters, Chen said.
The company expects revenue this quarter to reach US$12.9 billion to US$13.2 billion, up from US$12.75 billion last quarter.
The forecast factored in the damage from a temporary power outage at its Fab 14 P7 site in the South Taiwan Science Park (南部科學園區) on Wednesday.
TSMC expects gross margin this quarter to fall to between 49.5 percent and 51.5 percent, compared with 52.4 percent last quarter, due to a higher revenue contribution from 5-nanometer technology, which delivers a lower gross margin than the corporate average.
The chipmaker’s net profit last quarter increased 19.4 percent to NT$139.69 billion (US$4.93 billion), from NT$116.99 billion a year earlier. That represented a quarterly decline of 2.2 percent from NT$142.77 billion.
Earnings per share last quarter increased to NT$5.39 from NT$4.51 a year earlier. That was a decline from earnings per share of NT$5.51 a quarter earlier.
The rise of the cryptocurrency dogecoin has reached a new level after the token was used to pay for a lunar satellite launch. SpaceX, Elon Musk’s commercial rocket firm, is to embark on a moon voyage next year carrying a so-called cubesat — a mini-satellite used for space research — from Geometric Energy Corp that has been paid for entirely in dogecoin. The development is the latest twist in the saga over the digital token, which started as a joke in 2013, but is now a dominating Internet meme and sitting on a 21,000 percent rally in the past year. Musk has
CAPACITY EXPANSION: Construction of the site, which is to be the firm’s first mRNA production facility outside of Europe, is to begin this year and likely finish in 2023 COVID-19 vaccine maker BioNTech SE yesterday said it would build a Southeast Asia headquarters and manufacturing site in Singapore to produce hundreds of millions of messenger RNA (mRNA)-based vaccines per year. Construction of the site would start this year, and it could become operational by 2023, the German company said in a statement. “With this planned mRNA production facility, we will increase our overall network capacity, and expand our ability to manufacture and deliver our mRNA vaccines and therapies to people around the world,” BioNTech chief executive Ugur Sahin said. The vaccine produced by BioNTech jointly with Pfizer Inc of
OUTBREAK: About 200 of the airline’s 1,200 pilots are not able to work. Most of them have been quarantined to prevent further infection, but 12 have COVID-19 China Airlines Ltd (CAL,中華航空) yesterday confirmed that it would temporarily reduce its cargo flight services to cope with a pilot shortage, as one-sixth of its pilots have been sidelined by a COVID-19 outbreak. “We are working out a new schedule,” the airline said in a statement after local news media reports on Saturday said that it would be reducing its cargo services from Wednesday, primarily affecting US destinations. CAL declined to give details about its new operating plan, but the reports said that it would be suspending its cargo flights to Dallas Fort Worth International Airport, Hartsfield-Jackson Atlanta International Airport and
HELP? The finance minister faced questions by lawmakers on whether the National Stabilization Fund would step in to help prop up the market, which fell 4.11% yesterday The TAIEX yesterday sank by 680.76 points, or 4.11 percent, to close at 15,902.37 points, the second- largest one-day drop after a fall of 696 points on Jan. 30 last year, amid concern over the rising number of local COVID-19 infections, analysts said. The weighted index, which closed at 16,583.13 points on Tuesday, opened down and lost 300 points in the first 15 minutes of trading, before climbing to 16,550 points at 9:46am, Taiwan Stock Exchange (TWSE) data showed. However, it lost its footing again, plunging 1,400 points to 15,165.27 points at 11:25am. That represented a drop of 9 percent — the largest