TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co Ltd (TSMC) posted its best quarterly profit of all time and raised revenue and capital spending estimates to record highs as it forecasts “several years of growth opportunities” .
The world’s largest contract chip maker has become increasingly intense as the coronavirus pandemic drives the demand for advanced chips to power premium devices – a demand that is expected to grow as 5G technology and intelligence applications are adopted on a larger scale.
TSMC now expects to raise capital expenditures for advanced chip production and development to $ 25 billion – $ 28 billion this year, up to 60% more than the amount spent in 2020.
It also revised its compound annual growth rate targets for revenues over the period 2020-2025 to 10% -15% from a previous estimate of 5% -10%.
The demand for chips has been so high that manufacturers around the world are sounding the alarm about shortages. Several carmakers saw production plans affected by insufficient supply, which led TSMC to see an increase in demand from carmakers in the fourth quarter.
“We are working with our clients to mitigate the impact of the shortage,” CC Wei chief executive told analysts in an online earnings brief without elaborating.
The shortfall has several causes, say industry executives and analysts, including the bulk purchase by US sanctions hit Chinese technology giant Huawei Technologies, a fire at a chip factory in Japan, coronavirus blockages in Southeast Asia and a strike in France.
However, more fundamentally, there has been insufficient investment in 8-inch chip factories, owned mainly by Asian firms, which means that they have struggled to increase production as demand for 5G phones, laptops and cars grew faster than expected.
Partly helped by the launch of Apple Inc.’s iPhone 12, TSMC’s net profit for the fourth quarter of October-December rose 23% to $ 142.8 billion ($ 5.1 billion), beating a consensus estimate. of $ 135.39 billion. Revenue rose 22% to a record $ 12.68 billion.
TSMC predicted that first-quarter revenue would hit a new record of $ 12.7 billion to $ 13 billion, compared to $ 10.3 billion in the same period last year.
The stock price of the chip maker has risen by more than 70% in the last 12 months, giving it a market value of $ 560.7 billion.
($ 1 = $ 28,0050)
Reporting by Yimou Lee and Ben Blanchard; Editing by Himani Sarkar and Edwina Gibbs