TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has achieved its best quarterly profit ever, raising revenue and capital expenditure estimates to record levels while predicting ‘multi-year growth opportunities’.
The world’s leading contract maker has become increasingly clumsy as remote work in the midst of the coronavirus pandemic exploits the demand for advanced chips to power premium devices – the demand that is expected to continue as 5G technology and artificial intelligence applications are more widely accepted.
TSMC now expects to increase capital expenditures on the production and development of advanced chips this year to between $ 25 and $ 28 billion, as much as 60% higher than the amount it spent in 2020.
It also revised its compound annual revenue growth target for the period 2020 to 2025 to 10% -15% from an earlier estimate of 5% -10%.
The demand for chips is so great that manufacturers around the world are sounding alarm bells about shortages. Several automakers saw production plans hit by insufficient supply, which led to an increase in demand from automakers in the fourth quarter.
“We are working with our clients to mitigate the deficit impact,” CEO CC Wei told analysts in an online briefing without elaborating.
The shortages have several causes, say industry executives and analysts, including bulk purchases by U.S. sanctions-stricken Chinese technology giant Huawei Technologies, a fire at a chip plant in Japan, coronavirus shutdowns in Southeast Asia and a strike in France.
More fundamentally, however, there is underinvestment in 8-inch disk manufacturing plants mostly owned by Asian companies, which means they have struggled to increase production because demand for 5G phones, laptops and cars has picked up faster than expected .
Contributed in part by the launch of Apple Inc.’s iPhone 12, TSMC’s net profit for the fourth quarter of October rose 23% to T $ 142.8 billion ($ 5.1 billion), according to a Refinitiv consensus estimate from T $ 135.39 billion. Revenue rose 22% to a record $ 12.68 billion.
TSMC predicted that revenue from the first quarter would reach a new record of between $ 12.7 billion and $ 13 billion, compared to $ 10.3 billion in the same period a year earlier.
The disc maker’s share price has risen more than 70% over the past twelve months, giving it a market value of $ 560.7 billion.
($ 1 = 28,0050 Taiwanese dollars)
Reporting by Yimou Lee and Ben Blanchard; Edited by Himani Sarkar and Edwina Gibbs