Taiwan Semiconductor Manufacturing Company plans to cut capital investment by almost one-third this year as the world’s largest contract chip maker opposes analysts’ warnings about softening demand for technology gadgets.
TSMC expects capital spending to reach $ 44 billion this year, up 32% from $ 30 billion spent in 2021 and tripled in 2019, the company said Thursday. ..
This push emphasizes that semiconductors play a huge role in products that go far beyond traditional electronic products, from automobiles to factory equipment. It also reflects TSMC’s dominance in chip manufacturing worldwide.
TSMC has built a large manufacturing plant, or fab, for advanced 3 nanometer chips in southern Taiwan. Production at this technical level is expected to begin later this year. We are also building a new fab for production at the state-of-the-art technology level of 5 nanometers currently produced in the United States.
According to the company, after the rapid growth of the last two years, some analysts expect a slowdown, but chip demand will continue to grow with double-digit margins over the next few years and needs to be expanded. It is about.
CCWei, Chief Executive Officer of TSMC, said: “Therefore, we believe that TSMC will be less volatile even if there is a slowdown. Therefore, we expect our capabilities to remain very tight throughout 2022.”
The company expects revenue to increase by at least 25% this year. If TSMC achieves that goal, it will outpace the growth of the broader contract chip manufacturing industry by at least 5 percentage points and grow at three times the pace of the broader semiconductor market.
Many analysts have warned that technology demand growth will be flat, especially in the smartphone segment, which accounts for the majority of TSMC’s revenue.
Kristine Lau, Associate of Technology Consultancy Third Bridge, said:
She added that recent low forecasts for this year’s demand from Chinese smartphone brands will affect both MediaTek and TSMC, Taiwanese chip designers supplying most Chinese smartphone makers. rice field.
TSMC’s bullish forecast shows that net income for the fourth quarter of 2021 increased by 16.4% to NT $ 166.2 billion ($ 6 billion), with revenues up 21.2% in the year-ago quarter.
“that is [market] Gaining market share, it’s pricing, it’s unit growth, “wei of TSMC said.
TSMC said a year ago that the chip industry entered a multi-year period of structurally high growth due to the widespread use of semiconductors and increasing computing densities across various industries and the human sphere of life. Announced that he believes.
These trends are reflected in the launch of 5G telecom services, the use of artificial intelligence in all areas from entertainment to factory automation and autonomous driving, driving demand for TSMC chips and increasing capacity. I had to build it fast. The company said.
The pandemic has gained momentum by creating the unexpected demand for high-tech equipment needed to work from home. With global manufacturing and logistics disruptions, and pandemic planning failures, the surge in demand has led to a persistent chip shortage, making TSMC even more influential in the market.
The company raised prices and demanded prepayment from many customers to secure capacity. It was rarely used until last year. Chief Financial Officer Wendell van said he received US $ 6.7 billion in such upfront payments in 2021 and expects to increase further this year.
Driven by strong demand and full utilization, TSMC’s gross margin reached 52.7% in the December quarter and was expected to exceed 53% this year. This is the level that management has stated that it can be maintained in the long run.
TSMC is investing in new capacity even though chip demand is expected to ease
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