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(Bloomberg) – Taiwan Semiconductor Manufacturing Co. will invest up to $ 28 billion in capital spending this year, an incredible amount aimed at expanding its technological lead and building a plant in Arizona to serve major U.S. customers.
Capital spending for 2021 is between $ 25 billion and $ 28 billion, down from $ 17.2 billion the year before. About 80% of the spend will be on advanced processor technologies, which suggests that TSMC anticipates an increase in advanced chip manufacturing activities. Intel Corp., which announced a new CEO on Wednesday, is reportedly considering departing from tradition and outsourcing manufacturing to TSMC.
The world’s largest contract chipmaker is forecasting revenue of $ 12.7 billion to $ 13 billion this quarter, ahead of the average analyst estimate of $ 12.4 billion. This will fuel teen sales growth this year, although it is about half the pace of the increase in 2020.
The size of TSMC’s envisioned budget – more than half of its forecasted revenue for the year – underscores TSMC’s determination to maintain its dominance and supply its largest U.S. customers from Apple Inc. to Qualcomm Inc. at 52 % of forecast revenue for 2021, the chipmaker’s forecast spending would be the sixth highest of any company worth more than $ 10 billion, according to data compiled by Bloomberg. The spending could also increase the pressure on Intel, whose budget for 2020 was around $ 14.5 billion.
What Bloomberg Industries says:
TSMC’s $ 28 billion capital investment target for 2021 is 50% more than investors expected, and equals management’s vote of confidence in demand for smartphones and high-performance computing chips. (HPC) over the next three years. The capital spending target implies that 2021 sales could climb to $ 56 billion, 4% more than the consensus of $ 54 billion expects, assuming a capital expenditure intensity of 50%.
– Charles Shum, analyst
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Net profit for the quarter ended December climbed 23% to NT $ 142.8 billion ($ 5.1 billion), from NT $ 137.2 billion on average analyst estimates, the manufacturer said Thursday. of chips. This contributed to a 50% increase in annual profit, the fastest rate of expansion since 2010. Sales for the December quarter climbed 14% to a record NT $ 361.5 billion, according to the reports. Previously leaked monthly figures, in part thanks to Apple’s new 5G iPhones.
Read more: As Chip Rivals Fights, TSMC Goes To Death: Tim Culpan
TSMC shares retreated Thursday ahead of earnings results, breaking a 10-day rally that took its stock to an all-time high. Supplier ASML Holding NV jumped to 4% on Thursday.
Fourth quarter results revealed increasing contributions from TSMC’s most advanced 5-nanometer process technology – used to make Apple’s A14 chips. That was around 20% of total revenue in the quarter, more than double its share from the previous three months, while 7nm was 29%. By business segment, TSMC’s smartphone business contributed approximately 51% to revenue, while HPC was 31%.
While rivals like United Microelectronics Corp. are behind schedule and Semiconductor Manufacturing International Corp. struggling with US sanctions, TSMC’s pivotal role is likely to expand in 2021. The company has been working to meet consumer electronics demand for more automotive chips that require companies like Honda Motor Co. and Volkswagen AG to reduce their production.
TSMC said the auto industry has been “sluggish” since 2018 and demand only started to pick up in the fourth quarter. The company is working with its auto customers to resolve capacity supply issues, CEO CC Wei said, although he did not say when the bottlenecks that have forced automakers to cut production could be resolved.
Read more: Car production with missing chip in factories around the world
Executives did not address reports of Intel’s potential orders on Thursday, saying they were not discussing specific customers. The Santa Clara, Calif.-Based chipmaker had held talks with the Asian company after a series of internal technology slippages, people familiar with it said, although it is not clear whether the company could pivot after the appointment of a new CEO.
Read more: Intel in talks with TSMC and Samsung to outsource part of chip production
Construction of a planned $ 12 billion plant in the state of Arizona in the southwestern United States will begin this year, executives repeated, without specifying how much of the budget this year will be allocated to the government. project. The plant will be completed by 2024, with an initial target production target of 20,000 wafers per month, although the company plans to have a “large-scale production site” in the long term, Chairman Mark Liu said. .
Even as TSMC grows, foundries such as TSMC, UMC and Globalfoundries Inc. are not growing fast enough to meet the surge in demand for gadgets induced by the pandemic. These bottlenecks have boomed the flow of chips not only to cars, but also to Xboxes and PlayStations and even some iPhones. TSMC is by far the most advanced foundry responsible for manufacturing a significant portion of semiconductors in the world, serving Qualcomm and NXP Semiconductors NV, which also supply the mobile and automotive industries.
(Add comparisons of TSMC’s capex plans with peers in fourth paragraph)
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