Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is reportedly planning to tighten customers’ payment terms next year to better manage its cash flow and fund its capital spending.
The Hsinchu-based chipmaker plans to ask customers to pay within 15 days of receiving chips from TSMC, compared with its current practice of 30 days, the Chinese-language Liberty Times (the Taipei Times’ sister newspaper) reported yesterday, citing sources from firms in semiconductor supply chains.
The new payment terms are to take effect next year, the newspaper said.
Photo: Grace Hung, Taipei Times
TSMC counts Apple Inc, Advanced Micro Devices Inc, Nvidia Corp and MediaTek Inc (聯發科) among its major customers.
To capture rapidly growing demand, TSMC might spend more than US$40 billion on capital expenditure next year, following a record budget of US$40 billion to US$44 billion this year, company chairman Mark Liu (劉德音) told shareholders in Hsinchu last week.
Such huge capital spending is reducing the chipmaker’s free cash flow, Liu said.
The massive investment is aimed at boosting revenue growth in the next few years, as TSMC expects it to accelerate to an annual rate of 30 percent this year, up from 24.9 percent last year, Liu said.
In the first quarter, TSMC saw its free cash flow fall 22.85 percent to NT$110.04 billion (US$3.7 billion), compared with NT$142.64 billion a quarter earlier, the firm said in a financial statement.
That is the lowest figure in about three quarters.
TSMC also told customers that it planned to increase prices on new orders by 10 percent next year, the Liberty Times said.
The chipmaker has reportedly raised chip prices several times due to surges in manufacturing costs and a prolonged chip crunch.
TSMC said in an e-mail to the Taipei Times that it does “not comment on such questions.”
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Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) received about NT$147 billion (US$4.71 billion) in subsidies from the US, Japanese, German and Chinese governments over the past two years for its global expansion. Financial data compiled by the world’s largest contract chipmaker showed the company secured NT$4.77 billion in subsidies from the governments in the third quarter, bringing the total for the first three quarters of the year to about NT$71.9 billion. Along with the NT$75.16 billion in financial aid TSMC received last year, the chipmaker obtained NT$147 billion in subsidies in almost two years, the data showed. The subsidies received by its subsidiaries —
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