TSMC will increase chip spend in 2022 and anticipate multi-year growth due to semiconductor demand

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Taiwanese chip company TSMC expects its strong growth to accelerate in the coming years due to booming semiconductor demand, as the tech giant reported a record quarterly profit on Thursday and planned to spend at least a third more than last year.

The increasing demand for semiconductors used in smartphones, laptops and other devices during the COVID-19 pandemic has created an acute chip crisis that has forced automakers and electronics manufacturers to cut production, but the order books at TSMC and others Keep chip makers full.

Taiwan Semiconductor Manufacturing (TSMC), a large Apple supplier that also has customers like Qualcomm, posted earnings up 16.4 percent in the fourth quarter.

The company expects to increase capital expenditures this year to $ 40 billion (approximately Rs.295,700 billion) to US $ 44 billion (approximately Rs.3.25.210 billion). Last year it spent $ 30 billion (roughly 2.21.760 billion rupees).

TSMC announced a $ 100 billion expansion plan for the next few years in 2021 as new technologies such as fifth generation telecommunications (5G) and artificial intelligence applications drive chip demand.

The company is entering “a phase of higher structural growth,” said Chief Executive CC Wei in an online earnings briefing.

TSMC, Asia’s most valuable publicly traded company and the world’s largest contract chip maker, expects capacity to remain scarce this year and demand to be sustained over the long term, Wei said.

“With the foundry capacities fully utilized, TSMC’s short-term order outlook remains healthy,” wrote analysts at Fubon Research from Taipei in a statement at the beginning of January.

With a “multi-year industry megatrend” of strong chip demand fueled by new technologies, TSMC has raised its average annual revenue growth targets from 10 to 15 percent to 15 to 20 percent over the next few years.

Wei shrugged off market concerns about chip oversupply in the coming years, saying a significant increase in “silicon” in tech devices like electric cars would help TSMC with weather market corrections.

“Even if a correction does occur, we believe that our technology leadership and structural megatrend could make it less volatile for TSMC,” said Wei.

The company has set a long-term target of “53 percent and above” for its gross margins, compared to a previous target of “50 percent and above”.

TSMC predicts first quarter revenue of $ 16.6 billion (approximately Rs.122,710 billion) to $ 17.2 billion (approximately Rs.127,140 billion), compared to December 12 .92 billion US dollars (approximately 95,500 billion rupees) in the same period period one year earlier. For the year, she expects mid-to-high growth of 20 percent in US dollars.

That was higher than the TWD 161.6 billion (approximately Rs 43,270 billion) average of 22 analyst estimates produced by Refinitiv.

TSMC shares are up about 7 percent so far this year, which equates to a market value of 618 billion US dollars (approximately 45.67.760 billion rupees). The stock closed 0.15 percent higher on Thursday prior to the financial results release, trailing slightly the broader market, which closed 0.33 percent.

© Thomson Reuters 2022

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