According to Nikkei, Taiwan Semiconductor Manufacturing Co (TSMC) said it will spend a record amount of up to 44 billion USD by 2022 to expand capacity, with the aim of helping to alleviate chip shortages and meet growing demand. for advanced chips used in AI and supporting 5G applications for cars, data centers, smartphones.
TSMC’s capital expenditure plan this year is much higher than the record spending of 30 billion USD in 2021
TSMC is a supplier to most of the world’s leading chip developers. The company’s capital expenditure plan of $40-44 billion this year is much higher than the record spending of $30 billion in 2021. TSMC CEO CC Wei said the contract chip industry in general will grow 20% for the year in terms of revenue, and TSMC will outperform this growth. Mr. CC Wei also raised his forecast for the company’s compound annual growth rate for the “next few years” to between 15% and 20% in USD terms, up from a previous forecast of about 10%.
According to TSMC Chief Financial Officer Wendell Huang, the company is expanding “in a disciplined manner” to address investor concerns about an impending market correction. In a confidential reference to Intel, Mr. Wei said TSMC took into account the risk of “one of its customers” venturing into the contract chip manufacturing business and canceled the orders placed with TSMC.
Reportedly, Intel is building factories in the US state of Arizona, and is one of the most eager to respond to the US government’s call to bring semiconductor production domestically. Intel CEO Pat Gelsinger described Intel’s relationship with TSMC as one of “cooperation,” a blend of cooperation and competition.
The chip crisis affected a wide range of industries last year “or it may last, it may not” this year, but TSMC continues to see a growing need for structures from 5G and high-performance computing high capacity, as well as the demand for more semiconductor components for all types of electronics. Therefore, according to Mr. Wei, TSMC’s capacity will be tight throughout this year.
Despite his massive spending plans, Mr. Wei has assured investors that a 53% gross profit margin over the next few years is achievable, and TSMC can make sustainable profits from its investments. more than 25% investment. TSMC forecasts revenue for the first quarter of this year to be between $16.6 and $17.2 billion, up 7.4% from the previous quarter. It estimates gross margins between 53% and 55%, beating the market average of 52.2%.
In August 2021, the Taiwanese chip company told customers that it would increase prices by up to 20% for various manufacturing services. TSMC’s biggest price adjustment in a decade begins to have an impact in the final quarter of 2021 and could boost the company’s profit margins in 2022, according to multiple analyst estimates.
TSMC’s price increase and leadership in advanced semiconductor technology could help the company maintain a relatively stable position, even if the market has an upcoming correction, analysts said. TSMC’s revenue for the whole year 2022 is forecast to increase by up to 25%, due to price increases and receiving more orders from Nvidia, Qualcomm.