While Taiwan’s largest chipmaker has kept its fabs running at “over 100% utilisation”, the firm does not have enough capacity to satisfy all its customers and it has pledged to invest US$100 billion over the next three years to expand.
“TSMC is likely to achieve a CAGR of 15% with its US$100 billion capex spending over the next three years due to better-than-expected long-term semiconductor demand,” Cathay Futures analyst Felix Hsu said in a note dated April 7, adding he expects the chipmaker’s second-quarter guidance to beat consensus.
With major American carmakers and other gadget suppliers facing a prolonged shortage of chips, US President Joe Biden has proposed US$50 billion to bolster semiconductor research and manufacturing at home. The initiative could aid TSMC’s plan to build a cutting-edge fab in Arizona this year that could cost US$12 billion.
First-quarter revenue rose 17% to NT$362.4 billion, according to a company statement last week. Shares of TSMC have more than doubled over the past year. The stock advanced 1.1% on Thursday, before the company reported earnings.
TSMC’s most-advanced technologies continued to account for nearly half of revenue, with 5nm and 7nm processes contributing 14% and 35% of sales, respectively. By business segment, TSMC’s smartphone business amounted for about 45% of revenue, while high-performance computing increased to more than a third, reflecting sustained demand for devices even as economies start to emerge from the pandemic.
Semiconductor shortages are cascading through the global economy. Automakers like Ford Motor Co, Nissan Motor Co and Volkswagen AG have already scaled back production, leading to estimates for more than US$60 billion in lost revenue for the industry this year.
The situation is likely to get worse before it gets better. A rare winter storm in Texas knocked out swaths of US production. A fire at a key Japan factory will shut the facility for a month. Samsung Electronics Co warned of a “serious imbalance” in the industry, while TSMC itself has said it cannot keep up with demand despite running factories at more than 100% of capacity. — Bloomberg
