Chip Stocks Soar To Record After Taiwan Semi Unveils $28BN Spending Blitz

Chip equipment stocks soared on Thursday, and the Philly Semiconductor index surging to a new all-time high, after Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chipmaker, disclosed massive capital spending plans up to $28 billion into capital spending this year which Bloomberg called "a staggering sum", aimed at expanding its technological lead and constructing a plant in Arizona to serve key American customers.

(Click on image to enlarge)

The company announced that its capital spending for 2021 would be between $25 billion to $28 billion, compared with $17.2 billion the previous year. About 80% of the outlay will be devoted to advanced processor technologies, suggesting TSMC anticipates a surge in business for cutting-edge chipmaking. One reason for this is that Intel, which on Wednesday announced a new CEO, is said to be contemplating a departure from tradition and outsourcing manufacture to the likes of TSMC.

For the December quarter, the company reported net income of NT$142.8 billion ($5.1 billion), up 23%, and well above expectations of NT$137.2 billion. That contributed to a 50% increase in full-year profit, the speediest rate of expansion since 2010. Sales in the December quarter climbed 14% to a record NT$361.5 billion, according to previously disclosed monthly numbers, helped in part by robust demand for Apple’s new 5G iPhones.

TSMC also expects revenue of $12.7 billion to $13 billion this quarter, well ahead of the $12.4 billion average of analyst estimates. According to Bloomberg calculations, that will power mid-teens sales growth this year, though that’s roughly half the pace of the increase in 2020.

The fourth-quarter results revealed growing contributions from TSMC’s most-advanced 5-nanometer process technology, which is used to make Apple’s A14 chips. That accounted for about 20% of total revenue during the quarter, more than doubling its share from the previous three months, while 7nm represented 29%. By segment, TSMC’s smartphone business contributed about 51% to revenue, while HPC was at 31%.

1 2 3
View single page >> |

Disclaimer: Copyright ©2009-2021 Media, LTD; All Rights Reserved. Zero Hedge is intended for Mature Audiences. Familiarize yourself with our legal and use policies every ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.