TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co Ltd (TSMC) posted its best quarterly profit ever, pushing revenue and capital expenditure estimates to record levels as it predicted “several years of growth opportunity.”
The world’s top chip maker has become increasingly optimistic as remote working amid the coronavirus pandemic drives demand for advanced chips to power premium devices – demand expected to continue to grow as 5G technology and artificial intelligence applications grow be applied on a larger scale.
TSMC now expects to increase capital expenditure on advanced chip manufacturing and development to $ 25 billion – $ 28 billion this year, 60% higher than the amount it spent in 2020.
It also revised its compound annual revenue growth rate targets for the 2020-2025 period to 10% -15% from a previous estimate of 5% -10%.
The demand for chips is so high that manufacturers around the world are raising alarm bells about shortages. Several carmakers have seen production plans hit by insufficient supply, causing TSMC to see a jump in demand from carmakers in the fourth quarter.
“We are working with our customers to address the impact of the deficit,” Chief Executive Officer CC Wei told analysts in an online earnings briefing without elaborating.
The shortages have a variety of causes, industry executives and analysts say, including bulk purchases by US sanctioned Chinese technology giant Huawei Technologies, a chip factory fire in Japan, the shutdown of the coronavirus in Southeast Asia and a strike in France. .
More fundamentally, however, underinvestment in 8-inch chip factories mainly owned by Asian companies means they have struggled to ramp up production as demand for 5G phones, laptops and cars has grown faster than expected.
Aided in part by the launch of Apple Inc’s iPhone 12, TSMC’s fourth quarter net profit from October to December increased 23% to T $ 142.8 billion ($ 5.1 billion), reflecting Refinitiv’s consensus estimate of T $ 135.39 billion was surpassed. Sales were up 22% to a record $ 12.68 billion.
TSMC predicted first-quarter sales would hit a new record of between $ 12.7 billion and $ 13 billion, from $ 10.3 billion in the same period a year earlier.
The chipmaker’s stock price is up over 70% in the last 12 months, putting it at a market value of $ 560.7 billion.
($ 1 = 28.0050 Taiwan dollars)
Reporting by Yimou Lee and Ben Blanchard; Adaptation by Himani Sarkar and Edwina Gibbs