TSMC’s Capital Spending Could Reach US$10 billion

Jan 18, 2016

TSMC’s Capital Spending Could Reach US$10 billion in 2016

Taiwan Semiconductor Manufacturing Co (TSMC) on January 14 said it intended to boost capital spending this year to as much as US$10 billion to ensure its technological superiority following another record annual net profit last year

The new capital spending budget will rise more than 23 percent increase from last year’s US$8.1 billion, the firm said.

TSMC, which is a major chip supplier for Apple’s iPhones, said that about 70 percent of the capital expenditure would be used to build capacities for next-generation 10-nanometer (nm) technology, while 5 percent is allocated for its new 16nm production line in China.

Despite fierce competition in 10nm technology, “we intend to begin with a very high market share [of 10nm technology] and we intend not to lose it,” TSMC chairman Morris Chang said, according to Taiwan’s Central News Agency.

TSMC trails major rival Samsung in offering 16nm technology, but it expects rising customer demand to help expand its foundry market share in the 16nm segment to increase to more than 70 percent this year from 2015’s 50 percent.

Furthermore, Chang said he expects an annual growth rate of 5 percent for the company’s operating profit and 10 percent for its revenue this year. The international semiconductor industry is likely to only grow 2 percent this year in terms of revenue.

“Intel, Cisco, Microsoft, Qualcomm, they will all grow 5 percent, or less,” said HSBC analyst Steven Pelayo in an interview with the Central News Agency. “Amid recent expectations of a slow-growing environment, 10 percent is the new 20 percent.”

“Given the strong profit growth, the margin is going to be a surprise in 2016 for TSMC,” he added.

In the short term, TSMC expects a second-straight quarterly decline in revenue, according to the Central News Agency.

Source: TechNews