TSMC presses capex accelerator with $5 billion hike
TSMC advised that it now expects its 2019 capital expenditure budget to be between US$14 billion and US$15 billion. At the beginning of this year the foundry said it expected its capital budget to be between US$10 billion and US$11 billion.
This is clearly an attempt to capitalize on its success at 7nm and leave other chipmakers – essentially Samsung and Intel – behind. The spending will be used to cement TSMC’s leading position in advanced semiconductor manufacturing at 7nm and accelerate its introduction of 5nm and subsequent process nodes.
But such nodes rely on highly expensive extreme ultraviolet (EUV) lithography, hence the big hike in capex. ASML Holdings NV (Veldhoven, The Netherlands) is the monopoly supplier of EUV lithography equipment so much of that budget will be coming to Europe.
But the spending is also a response to raised spending by consumer giant Samsung which was expected to spend as much as $18 billion on semiconductor capex in 2019 (see Samsung capex puts pressure on Intel, TSMC).
In its third quarter earnings statement TSMC said that 4Q19 revenue is expected to be between $10.2 billion and $10.3 billion, which would see the company achieving annual revenue of about $34.5 billion at the mid-point of the guidance.
TSMC announced a net income of NT$101.07 billion (about $3.3 billion, according to contemporary conversion rates) on revenue of NT$293.05 billion (about $9.56 billion) in the 3Q19. TSMC list the 3Q revenue as being equivalent to $9.4 billion, an increase of 10.7 percent over the previous year’s figure and an increase of 21.3 percent from the previous quarter.
Next: So many 7nm sales
TSMC’s 7nm manufacturing process accounted for 27 percent of total wafer revenue in the 3Q and the 16nm process accounted for 22 percent. The 10nm process only accounted for 2 percent of sales. TSMC’s definition of advanced processes is those of 16nm and lower and these accounted for 51 percent of 3Q wafer revenue.
Wendell Huang, TSMC CFO, said 7nm sales were boosted by sales into premium smartphones and high-performance computing. “We expect the strength of demand for our 7-nanometer technology will continue, driven by high-end smartphones, initial 5G deployment and HPC-related applications,” he said.
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News articles:
Industry is putting the brakes on memory capex
$50 billion in spending on new fabs in 2020
Samsung capex puts pressure on Intel, TSMC
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