TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) posted its best quarterly earnings in history and raised estimates of capital income and spending to record levels as it predicted “multiple years of growth opportunities ”.
The world’s largest contract chip maker has become increasingly bullish as remote work amid the coronavirus pandemic boosts demand for advanced chips to power premium devices, a demand expected to continue to rise as 5G technology and artificial intelligence applications are applied more widely.
TSMC now expects to raise capital spending on advanced chip production and development to between $ 25 billion and $ 28 billion this year, up 60 percent from the amount it invested in 2020.
It also revised its compound annual growth rate targets for revenue over the period 2020-2025 from 10% to 15%, based on a previous estimate of 5% to 10%.
The demand for chips has been so high that manufacturers around the world are sounding alarms about shortages. Several automakers have been affected by production plans due to insufficient supply, which caused TSMC to increase demand from automakers in the fourth quarter.
“We are working with our customers to mitigate the impact of the shortage,” CEO CC Wei told analysts at an online earnings briefing without detailing it.
The shortage has several causes, according to industry executives and analysts, including the massive purchase by US sanctions hit by Chinese technology giant Huawei Technologies, a fire at a chip plant in Japan, closes of coronavirus in Southeast Asia and a strike in France.
More fundamentally, however, there has been little investment in 8-inch chip manufacturing plants owned mostly by Asian companies, meaning they have struggled to increase production as demand for phones, laptops and 5G cars were growing 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 an estimate Refinitiv consensus of $ 135.39 million. Revenue rose 22% to $ 12,688 million.
TSMC predicted that first-quarter revenue would reach a new record of $ 12.7 billion to $ 13 billion, up from $ 10.3 billion in the same period last year.
The stock price of the chip maker has risen more than 70% in the last twelve months, giving it a market value of $ 560.7 billion.
($ 1 = $ 28,0050 from Taiwan)
Report by Yimou Lee and Ben Blanchard; Edited by Himani Sarkar and Edwina Gibbs