Taiwan Semiconductor Manufacturing Co. raised its growth projections and unveiled record spending plans for 2022, signalling that the voracious demand for chips that has fueled a months-long supply chain squeeze will continue for years.
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Apple's most important chipmaker is now forecasting average sales growth of 15% to 20% annually - as much as double its previous expectation. The company estimates sales of $16.6 billion to $17.2 billion in the first quarter, at least 5% ahead of estimates. In 2022, it plans to spend $40 billion to $44 billion expanding and upgrading capacity.
TSMC has a pole position in the market after a unprecedented chip shortage triggered by the Pandemic, a deficit that has walloped the production of cars, mobile phones and game consoles. Asia's most valuable corporation intends to maintain its technological lead over Intel Corp. and Samsung Electronics Co., safeguarding its market share as a growing number of connected devices like cars drive datacenters and high-end computing.
With the crunch showing no signs of abating, TSMC has been running at full capacity over the past year and is investing heavily in new fabs from its home island to Japan and the U.S. TSMC's 2022 spending target is up at least $10 billion and at least 43% higher than the $25 billion to $28 billion that Intel has set aside this year to regain its once dominant position in the industry.
According to research by Susquehanna Financial Group, delivery times for chips increased by six days to about 25.8 weeks in December compared to November. The lag marks the longest wait time since the firm began tracking the data in 2017. Chip-equipment maker ASML NV jumped by as much as 3% Thursday.
The squeeze was most notable in industries including automaking, which wiped out an estimated $200 billion in sales for carmakers such as Volkswagen AG and General Motors Co. last year. Even Apple, TSMC's top customer, hasn't been spared: the iPhone maker said it lost $6 billion in sales due to component shortages in the three months ended September, while losses stemming from product constraints will exceed $6 billion in the holiday quarter.
The endemic shortage has been a boon for chipmakers. The Taiwanese company reported a better than expected 16% increase in December-quarter net income to a record NT $166.2 billion $6 billion on Thursday. It set a long-term target of at least 53% for gross margins. Sales in the quarter hit $438.2 billion, a record, based on previously released monthly revenue numbers.
TSMC has a capex plan for 2022 of up to $44 billion that looks set to enable it to capture high growth in leading and specialty technology nodes and support its percentage sales-growth target of 15 -- 20% CAGR. Its net cash position of $12 billion and consistent operating cash flow appear to support its sizable capacity-expansion plan while maintaining its dividend payout. The company can take on more debt without hurting its financial metrics.
The TSMC needed to boost capital expenditure plans because they needed to expand capacity to fully capitalize on the boom. The company initially set aside $100 billion to grow output over the three years to 2023, and announced plans for a new plant in Japan and Arizona. It is also in discussions about manufacturing in Europe, though those discussions are more preliminary.
More customers are paying upfront to secure supplies, compared to just one or two before. TSMC took $6.7 billion of pre-payments in 2021, according to executives.
Chairman Mark Liu told analysts on a conference call Thursday that semiconductor industry growth will continue to be fueled by the structural trends of 5 G and high-performance computing. America s Electric Vehicle Selection is About to Get a Lot Wider, None America s Electric Vehicle Selection
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