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TSMC to boost chip spending in 2022, sees multi-year growth ahead of semiconductor demand

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Taiwanese chip firm TSMC expects strong growth driven by rising semiconductor demand in the coming years, as the tech giant posted a record quarterly profit on Thursday and said it was at least a third more than last year. Planning to spend more.

Rising demand for semiconductors used in smartphones, laptops and other gadgets during the COVID-19 pandemic has led to an acute chip crisis, forcing automakers and electronics makers to cut production, but The order book on TSMC and other chipmakers is to be maintained.

Taiwan Semiconductor Manufacturing (TSMC), a major Apple supplier that also has customers such as Qualcomm, reported a 16.4 percent increase in fourth-quarter profit.

The company said that it expects capital expenditure to increase between $ 40 billion (about Rs 2,95,700 crore) and $ 44 billion (about Rs 3,25,210 crore) this year. Last year it spent $ 30 billion (about Rs 2,21,760 crore).

TSMC announced a $100 billion (about Rs 7,390 crore) expansion plan over the next few years in 2021, as new technologies such as fifth-generation (5G) telecommunications technology and artificial intelligence applications also drive demand for the chip.

The company is entering a “period of high structural growth,” Chief Executive Sisi Wei told an online earnings briefing.

TSMC, Asia’s most valuable listed firm and the largest contract chip maker globally, expects capacity to remain tight this year and demand to sustain over the long term, Wei said.

“With the foundry capacity fully loaded, TSMC’s near-term order outlook remains healthy,” analysts at Taipei-based Fubon Research wrote in a note in early January.

Calling strong chip demand from new technologies a “multi-year industry megatrend,” TSMC raised its compound annual growth rate target for revenue from 10 percent-15 percent to 15 percent-20 percent over the next several years.

Wei allayed market concerns about over-supply of the chip in the coming years and said that a substantial increase in “silicon materials” in tech gadgets such as electric cars will help TSMC weather market recovery.

“Even if a correction does occur, we believe it could be less volatile for TSMC due to our technology leadership position and structural megatrends,” Wei said.

The company has set a long-term target of “53 percent and above” for its gross margin, up from the previous target of “50 percent and above.”

TSMC estimates revenue in the first quarter to be between $16.6 billion (approximately Rs 1,22,710 crore) to $17.2 billion (approximately Rs 1,27,140 crore), as compared to $12.92 billion (approximately Rs 95,500 crore) in the same quarter. In. period one year ago. For the year, it expects to grow in the mid to high 20 percent range in US dollar terms.

This was higher than the average of TWD 161.6 billion (about Rs 43,270 crore) of 22 analyst estimates compiled by Refinitiv.

TSMC’s shares have risen nearly 7 per cent so far this year, giving it a market value of $618 billion (approximately Rs 45,67,760 crore). The stock closed 0.15 percent higher on Thursday ahead of the release of financial results, outperforming the broader market that ended 0.33 percent higher.

© Thomson Reuters 2022


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