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.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day