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TSMC logs highest quarterly profit, sees record revenue and capital expenditures

TAIPEI (Reuters) – Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) posted its best ever quarterly result ever, raising revenue and capital spending estimates to record levels as it predicted “several years of growth potential”.

FILE PHOTO: A logo from Taiwan Semiconductor Manufacturing Co (TSMC) is seen at the headquarters in Hsinchu, Taiwan on August 31, 2018. REUTERS / Tyrone Siu

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7;s leading contract maker has become increasingly bullish as remote work in the midst of the coronavirus pandemic drives demand for advanced chips to power premium devices – demand that is expected to continue to rise as 5G technology and artificial intelligence applications are adopted more widely.

TSMC now expects to raise capital expenditures on the production and development of advanced chips to between $ 25 billion and $ 28 billion this year, as much as 60% higher than the amount they spent in 2020.

It also revised its compound annual revenue growth targets for the period 2020 to 2025 to 10% -15% from a previous estimate of 5% -10%.

The demand for chips has been so great that manufacturers all over the world are sounding alarm bells about shortages. Several automakers have seen production plans hit by inadequate supply, leading to TSMC seeing a jump in demand from automakers in the fourth quarter.

“We work with our clients to reduce the shortfall,” CEO CC Wei told analysts in an online earnings briefing without elaborating.

The shortfall has several causes, say industry leaders and analysts, including bulk purchases from U.S. sanctioned Chinese tech giant Huawei Technologies, a fire at a chip plant in Japan, coronavirus lockdowns in Southeast Asia and a strike in France.

More fundamentally, however, there has been underinvestment in 8-inch chip manufacturing plants, which are mainly owned by Asian companies, meaning they have struggled to increase production as demand for 5G phones, laptops and cars picked up faster than expected.

Partly aided by the launch of Apple Inc.’s iPhone 12, TSMC’s net profit for the fourth quarter, October-December, rose 23% to T $ 142.8 billion. ($ 5.1 billion) and beat a Refinitive consensus estimate of T $ 135.39 billion. Revenue jumped 22% to a record $ 12.68 billion.

TSMC predicted revenue in the first quarter would hit a new record of between $ 12.7 billion and $ 13 billion against $ 10.3 billion in the same period last year.

The chip maker’s share price has risen more than 70% over the past 12 months, giving it a market value of $ 560.7 billion.

($ 1 = 28,0050 Taiwan dollars)

Reporting by Yimou Lee and Ben Blanchard; Clip by Himani Sarkar and Edwina Gibbs

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