Taipei (Reuters)-Taiwan Semiconductor Manufacturing Company (TSMC) announced its best quarterly profit ever and raised its revenue and capital expenditure expectations to record levels because the company expects “a multi-year growth opportunity”.
As the coronavirus pandemic promotes remote work and drives the demand for advanced chips to power high-end devices, the world̵
TSMC now expects to increase capital expenditures for advanced chip production and development to between US$25 billion and US$28 billion this year, which is 60% higher than its 2020 spending.
It also raised its compound annual revenue growth target from 2020 to 2025 to 10%-15% from the previous 5%-10%.
The demand for chips is so high that manufacturers around the world are ringing the alarm about shortages. Several automakers have seen production plans hit by insufficient supply, leading TSMC to see a surge in demand from automakers in the fourth quarter.
“We are working with customers to mitigate the impact of shortages,” CEO CC Wei told analysts in an online earnings briefing, without elaborating.
Industry executives and analysts said that there are many reasons for the shortage, including large purchases by the Chinese technology giant Huawei Technologies, which has been sanctioned by the United States, the fire at the Japanese chip factory, the blockade of the coronavirus in Southeast Asia, and the strike in France.
More fundamentally, however, the lack of investment in 8-inch chip manufacturing plants mainly owned by Asian companies means that they have been struggling to increase production as the demand for 5G mobile phones, laptops and cars is growing faster than expected.
TSMC’s October-December fourth quarter’s net profit surged 23% to NT$142.8 billion (US$5.1 billion), beating Refinitiv’s NT$135.39 billion expectation, which was partly due to The release of Apple’s iPhone 12. Revenue jumped 22% to a record 12.68 billion U.S. dollars.
Taiwan Semiconductor Manufacturing Company (TSMC) predicts that the first quarter revenue will hit a new record of US$12.7 billion to US$13 billion, compared with US$10.3 billion in the same period last year.
In the past 12 months, the chip maker’s stock price has risen by more than 70%, and its market value has reached $560.7 billion.
(1 USD = 28.0050 New Taiwan Dollars)
Reporting by Lee Yimou Lee and Ben Blanchard; Editing by Himani Sarkar and Edwina Gibbs