TSMC Boosts Capital Spending to Meet Handset Demand

15 Jul

Due to higher-than-expected demand for handsets, TSMC will raise its capital spending, the company announced Thursday. TSMC will spend between US$9.5 billion and US$10.5 billion this year, up 5 percent from an estimate made in April. According to The Taipei Times, the capital spending increase will be deployed for 10-nanometer [nm] and 7nm [technologies].

TSMC plans to increase production of 10nm technology in the first quarter next year and 7nm in 2018. The company expects to have a 70 percent share of the 10nm segment worldwide next year. Apple and Mediatek will be early adopters [of TSMC’s 10nm technology] in the first half of 2017, according to a new BNP Paribas research report.

TSMC co-chief executive officer Mark Liu reckons the chip-making giant’s revenue will rise at a compound annual growth rate of between 5 and 10 percent in the next five years, outpacing expected growth in the global semiconductor industry of 2 or 3 percent. The smartphone segment will be one of its major growth drivers going forward, despite a slowdown in the global handset market, analysts say. Liu said he expects TSMC’s smartphone chip revenue contribution to move higher than the current 55 percent in the next five years.

In the third quarter, TSMC expects revenue to increase by as much as 15.86 percent to NT$257 billion (US$8.01 billion) from NT$221.81 billion in the April to June period.Gross margin is expected to reach 50 and 52 percent this quarter, compared with last quarter’s 51.5 percent, while operating margin could be between 39.5 percent and 41.5 percent, following last quarter’s 41.2 percent;

In the April-to-June quarter, TSMC posted a profit of NT$72.51 billion, up 11.9 percent from NT$64.76 billion in the previous quarter and beating Daiwa Capital Markets’ estimate of NT$68.42 billion and NT$66.3 billion predicted by BNP Paribas.

Facebook Comments