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.”
soft landing: The US’ rate-setting FOMC finds itself in a difficult situation as it seeks to address inflation through interest rate hikes while avoiding a recession The US Federal Reserve is widely expected to hold interest rates steady on Wednesday after a summer of mixed economic data, while leaving the door open to another hike if needed. The Fed has raised interest rates 11 times over the past 18 months, lifting its key lending rate to a level not seen for 22 years as it tackles inflation still stubbornly above its long-term target of 2 percent. Analysts and traders broadly expect the US central bank to hold rates steady on Wednesday in order to give policymakers more time to assess the health of the world’s largest economy. “We think
AI TREND: TSMC has been rapidly expanding capacity to meet a spike in demand for advanced packaging services, but still expects supplies to be tight for 18 months Arizona is in talks with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) about advanced chip packaging, state Governor Katie Hobbs said yesterday, which is crucial for the manufacturing of artificial intelligence (AI) chips. TSMC, which is building a US$40 billion chip factory in the US state, has not announced plans to build facilities for advanced chip packaging in the US. Advanced packaging processes stitch multiple chips together into a single device, lowering the added cost of more powerful computing. “Part of our efforts at building the semiconductor ecosystem is focusing on advanced packaging, so we have several things in the works around that
NXP Semiconductors NV expects its first automotive-grade 5-nanometer chip built by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to become available for automakers within one-and-a-half years at the earliest, following demand for better computing performance and energy efficiency for connected vehicles, a company executive said yesterday. That would mean a significant upgrade from the 16-nanometer technology NXP adopted in its existing series of microprocessors. NXP chief technology executive Lars Reger made the remarks during a media briefing yesterday in Taipei. The latest updates came after NXP unveiled its plan to source 5-nanometer capacity from TSMC in 2021. This is Reger’s first trip to
Tailwinds: Blockbuster earnings at Nvidia Corp have sparked hopes of a tech sector boom; Taiwanese chipmakers are hopeful benefits will come to them too The worst could be over for the New Taiwan dollar as China’s economic recovery and a rebound in the chip industry will support the beleaguered currency, analysts said. The NT dollar is on course to weaken for a sixth month, the longest stretch since 2006, after foreign funds turned sour on its technology sector and risk sentiment deteriorated on slower growth in China. The tide seems to be turning now on nascent signs of stabilization in China’s economy — its biggest trading partner — following policy boosts. The yuan emerged as the best-performing Asian currency last week, followed by the Japanese yen