TSMC, the world’s largest foundry, announced Thursday (Jan. 14) that its capital expenditures (CAPEX) for 2021 will look up to $28 billion, a new all-time high for the company.
Compared to the company’s capital expenditures of about $17.2 billion last year, TSMC announced that this year’s CAPEX will reach $25 billion to $28 billion, far exceeding market expectations. TSMC said that about 80% of the spending will be used in the 7nm, 5nm, 3nm and other advanced process chip manufacturing, also covering the company will be built in the United States in Arizona 5nm fab needs.
TSMC Treasurer Jen-Chao Huang said at a corporate briefing on Thursday, “Now that we are entering another high growth range, we believe that higher capital intensity is appropriate at this point in time and can help TSMC grasp the opportunities for future growth.” The company is bullish on the growth trends of 5G and HPC (High Performance Computing) in the coming years and expects TSMC to have a CAGR growth rate of 10% to 15% (in USD) between 2020 and 2025, which was revised by 5% from the last corporate presentation.
This time, TSMC not only increases its capital expenditure investment, but also raises its forecast for the company’s compound annual growth rate, which is inseparable from its current leading position in global semiconductor manufacturing, with U.S. companies Apple and Super Micro (AMD) relying on it to manufacture advanced chips. Research institute Bernstein in a report released on January 12, said bluntly that the largest U.S. chipmaker Intel (Intel) may ask TSMC to help OEM manufacturing 3nm chips: “The world needs advanced semiconductors, and only TSMC can do it.”
Credit Suisse (Credit Suisse) analyst Randy Abrams also issued a report on January 14, TSMC has such confidence in the company’s growth is a reflection of its expectations for Intel to outsource the manufacture of central processing unit (CPU) chips, which is expected to open up a potential market opportunity of up to $ 20 billion for TSMC. Although TSMC did not make any comments on Intel’s order in the meeting, the market is actively watching Intel’s next step.
Meanwhile, TSMC reported a record net income after tax (net income) of NT$142.77 billion (approximately US$5.1 billion) for the fourth quarter of 2020, up 23% from the same period in 2019. TSMC’s share price in the Taiwan stock market has risen by more than 70% over the past year.
In response to TSMC’s May 2020 announcement of a factory in the U.S., Chairman Deyin Liu confessed to the corporation, “We recently purchased about 1,100 acres (acre) of land in Arizona, U.S., and do have a long-term plan to build a large-scale wafer fab in the U.S.” But he added that TSMC set up a factory in Arizona, U.S. The first phase of the goal is to produce 20,000 wafers per month in 2024, and subsequent capacity expansion plans will depend on market conditions, cost economics, and the support that the U.S. government can provide.
Another point of concern is that TSMC previously stopped exporting chips to huawei in response to a ban by the U.S. Department of Commerce, and its China revenue can be seen from TSMC’s revenue report for the fourth quarter of 2020, which was affected by Huawei’s ban: TSMC’s China revenue share fell from 22% in the third quarter to 6% in the fourth quarter. However, TSMC’s overall operations were not negatively impacted as its other large North American customers filled the gap created by Huawei.
Responding to a question from a legal entity about the China market, D.Y. Liu said TSMC’s advanced process chip products did encounter a “Reset” situation in China, but he believes “China’s demand for chips will continue, and TSMC will gradually and appropriately increase the capacity of its Nanjing plant in China. “
Most of TSMC’s fabs are concentrated in Taiwan, the company currently has an 8-inch fab in Washington State, the United States, will also build a new 12-inch fab in Arizona; its 8-inch fab in Shanghai, China, and a 12-inch mega-fab in Nanjing.
TSMC estimates that the global semiconductor (excluding memory) market will grow at 8% in 2021, and the wafer manufacturing industry will grow at about 10%.
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