hursday, January 27th, 2011
UPDATE 2-TSMC sets record capex; new growth eyed
* Q4 net T$40.72 bln vs consensus forecast T$37.95 bln
* 2011 capex at $7.8 bln vs $5.94 bln in 2010
* Sees lower Q1 sales and profit margins vs Q4
* To further widen technology gap with rivals
(Recasts, adds analyst comments and details)
(Recasts, adds analyst comments and details)
By Baker Li
TAIPEI, Jan 27 (BestGrowthStock) – TSMC’s (2330.TW: ) will increase
capital spending to a record this year amid optimism over chip
demand for new hi-tech gadgets, and is set to further widen its
lead in advanced technologies over smaller rivals.
capital spending to a record this year amid optimism over chip
demand for new hi-tech gadgets, and is set to further widen its
lead in advanced technologies over smaller rivals.
Taiwan Semiconductor Manufacturing Co Ltd (TSM.N: ), the
world’s biggest contract chipmaker, said on Thursday its capital
expenditure would grow about a third to $7.8 billion in 2011
following a dip in fourth quarter earnings as the Christmas
demand season came to an end.
world’s biggest contract chipmaker, said on Thursday its capital
expenditure would grow about a third to $7.8 billion in 2011
following a dip in fourth quarter earnings as the Christmas
demand season came to an end.
The budget is much higher than $1.8 billion that cross-town
rival UMC (2303.TW: ) allocated this year. The two are racing to
lift output after winning new orders from clients who are selling
more chips for tablet PCs, smartphones and high-resolution TVs.
rival UMC (2303.TW: ) allocated this year. The two are racing to
lift output after winning new orders from clients who are selling
more chips for tablet PCs, smartphones and high-resolution TVs.
There is a risk if demand slows and inventories surge quickly
in the second half of 2011, but any such problem would be bigger
for second-tier players such as China’s SMIC (0981.HK: ) as they
are more vulnerable to pricing pressure than the likes of TSMC.
in the second half of 2011, but any such problem would be bigger
for second-tier players such as China’s SMIC (0981.HK: ) as they
are more vulnerable to pricing pressure than the likes of TSMC.
“The technology gap between TSMC and others is becoming
bigger and bigger,” said Michael On, managing director at Beyond
Asset Management.
bigger and bigger,” said Michael On, managing director at Beyond
Asset Management.
“In a upturn, everyone can benefit but only TSMC can have
steady orders from clients in a downturn,” said On, who owns TSMC
shares in his portfolios.
steady orders from clients in a downturn,” said On, who owns TSMC
shares in his portfolios.
UMC is about two quarters behind TSMC at making microchips
with 65-nanometre technology, but is five quarters behind at more
advanced 45-nanometre technology, CLSA said.
with 65-nanometre technology, but is five quarters behind at more
advanced 45-nanometre technology, CLSA said.
“We expect to continue to fully utilise our capacity this
year,” TSMC Chairman and Chief Executive Morris Chang told
Thursday’s investor conference.
year,” TSMC Chairman and Chief Executive Morris Chang told
Thursday’s investor conference.
“To meet stronger demand, we will ramp up new capacity.”
Royal Bank of Scotland said in a recent note that as a group,
total capital expenditure from TSMC, UMC and other smaller chip
foundries including U.S.-based Global Foundries could rise 39
percent to $18.1 billion in 2011.
total capital expenditure from TSMC, UMC and other smaller chip
foundries including U.S.-based Global Foundries could rise 39
percent to $18.1 billion in 2011.
POST HOLIDAY SEASON DIP
As technology sales typically dwindle after the year-end
holiday season, TSMC expects first-quarter sales to reach
T$105-107 billion, a dip from the fourth quarter’s T$110 billion.
holiday season, TSMC expects first-quarter sales to reach
T$105-107 billion, a dip from the fourth quarter’s T$110 billion.
TSMC, which boasts fatter margins thanks to its early
investments in advanced technologies, said its first-quarter
gross profit margin should be 47-49 percent, compared with 49.8
percent in the previous three months and higher than UMC’s gross
margin of 32 percent in the fourth quarter.
investments in advanced technologies, said its first-quarter
gross profit margin should be 47-49 percent, compared with 49.8
percent in the previous three months and higher than UMC’s gross
margin of 32 percent in the fourth quarter.
TSMC also expects an operating profit margin of 35-37
percent, versus the fourth quarter’s 37.7 percent.
percent, versus the fourth quarter’s 37.7 percent.
Investors have looked beyond the weak fourth quarter to bet
on new growth. TSMC’s Taipei-listed shares rose to their highest
close in a decade last week and UMC shares trade at a one-year
high.
on new growth. TSMC’s Taipei-listed shares rose to their highest
close in a decade last week and UMC shares trade at a one-year
high.
TSMC, whose clients include Texas Instruments (TXN.N: ) and
Nvidia (NVDA.O: ), earned a net profit of T$40.72 billion ($1.4
billion) in October-December.
Nvidia (NVDA.O: ), earned a net profit of T$40.72 billion ($1.4
billion) in October-December.
That was 25 percent higher than a year ago but down 13
percent from the record T$46.9 billion in the third quarter.
Analysts had expected TSMC to earn T$37.95 billion, according to
a consensus forecast from Thomson Reuters I/B/E/S.
percent from the record T$46.9 billion in the third quarter.
Analysts had expected TSMC to earn T$37.95 billion, according to
a consensus forecast from Thomson Reuters I/B/E/S.
Sales of chips made by 65-nanometre process technology, or 65
billionths of a metre, accounted for 31 percent of TSMC’s total
sales in the fourth quarter, while the 40-nanometre technology
chips made up 21 percent.
billionths of a metre, accounted for 31 percent of TSMC’s total
sales in the fourth quarter, while the 40-nanometre technology
chips made up 21 percent.
A day earlier UMC posted weaker fourth-quarter net profit and
forecast its wafer shipments would decline in the first quarter.
[ID:nTOE70N02Z]
forecast its wafer shipments would decline in the first quarter.
[ID:nTOE70N02Z]
TSMC released the results as the Taipei stock market closed
on Thursday. The stock rose 0.8 percent versus the main TAIEX’s
(.TWII: ) 0.5 percent gain.
on Thursday. The stock rose 0.8 percent versus the main TAIEX’s
(.TWII: ) 0.5 percent gain.
TSMC shares have gained about 6 percent since the start of
the year, while the broader Taiwan market has been flat. UMC
shares have risen 7 percent this month.
(US$1=T$29.0)
(Editing by Jonathan Standing)
the year, while the broader Taiwan market has been flat. UMC
shares have risen 7 percent this month.
(US$1=T$29.0)
(Editing by Jonathan Standing)
TSMC approves $1.6 billion capex plan
Mark LaPedus
5/11/2010 3:00 PM EDT
SAN JOSE, Calif. -- Silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has approved a $1.647 billion capital spending program, including plans to build a new fab in central Taiwan.
As part of the plan, TSMC approved capital appropriations of $1,051,600 to expand its advanced process capacity at two 300-mm plants in Taiwan, dubbed Fab 12 and Fab 14.
The company also approved capital appropriations of $385 million to expand and upgrade its 200-mm wafer capacity. And as expected, it approved capital appropriations of $210 million to build Fab 15 in the Central Taiwan Science Park.
In total, TSMC is expected to spend $4.8 billion this year. In fact, many foundry vendors are engaged in a capital spending war or "arms race," said C.J. Muse, an analyst with the Barclays Capital, in a new report.
Three vendors--GlobalFoundries, Samsung and TSMC-- appear to be engaged in a new capital spending race in an effort to gain share in current and future cycles. The trends could be a problem for the other digital foundries, such as SMIC, UMC and others, many of which cannot keep up with the spending race and will likely fall behind the curve.
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