Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its revenue growth forecast for this year to above 30 percent, up from the 25 percent it estimated three months earlier, citing extremely robust artificial intelligence (AI)-related chip demand.
“Our customers and customers’ customers, who are mainly cloud service providers, continue to send us very positive signals and outlook,” TSMC chairman and CEO C.C. Wei (魏哲家) said at an earnings conference.
The company also hiked its capital expenditure for this year toward the higher end of its forecast, or US$56 billion, as it aims to step up advanced chip capacity expansions, such as 3-nanometer process technology, to meet demand.
Photo: Ritchie B. Tongo, EPA
That would drive the company’s total capital expenditure from this year to 2028 past the US$101 billion spent in the past three years, TSMC said.
The company believes its revenue growth would still outpace capital spending growth over the next few years.
In a rarely seen strategic move, TSMC said it is adding a new 3-nanometer production line at the Tainan Science Park.
Along with the company’s 3-nanometer capacity expansion at its second Japanese fab and its second fab in Arizona, they are to enter volume production in the first half of next year at the earliest, it said.
“Historically, we do not add additional capacity to a node once it has reached its target capacity,” Wei said.
TSMC is stepping up capital investment to increase 3-nanometer capacity globally to meet robust demand for chips used in smartphones, high-performance computing and AI applications, as well as automotive and Internet-of-Things products, Wei said.
The company also plans to convert manufacturing facilities for producing less advanced 5-nanometer chips to 3-nanometer chips to maximize capacity, he said.
The company would also be flexible in allocating capacities for 7-nanometer, 5-nanometer and 3-nanometer chips, he added.
As for the tight supply of its advanced chip packaging capacity, mainly for AI chips, TSMC is building a new pilot line utilizing new chip-on-panel-on-substrate technology, which would start volume production in a few years, Wei said.
The capacity constraint has fueled concern that it could prompt customers to adopt Intel Corp’s substrate-based packaging technology, called embedded multi-die interconnect bridge.
Wei said TSMC remains the supplier of the biggest reticle chips in the packaging industry today and is developing even larger reticle chips to satisfy customer demand.
In response to an investor’s question on Intel’s participation in Elon Musk’s Terafab initiative, Wei said: “It takes two to three years to build a fab, and it takes one to two years to ramp it up. There are no shortcuts.”
“The fundamental rules of the foundry game never change,” he said.
The Middle East conflict is not expected to harm the company’s business in the short term, TSMC said, adding that there is no imminent risk of disruptions in supplies of helium, hydrogen or other essential chemicals.
Instead, the company expects revenue this quarter to grow about 10 percent sequentially, or about 30 percent annually, to between US$39 billion and US$40.2 billion, it said.
Gross margin this quarter is projected to reach between 65.5 percent and 67.5 percent, compared with 66.2 percent last quarter, it added.
Net profit last quarter rose to a record NT$572. 4 billion (US$18.14 billion), up 13.2 percent sequentially or 58.3 percent annually. Earnings per share climbed to NT$22.08, from NT$19.5 in the previous quarter and NT$13.94 a year earlier.
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