Thursday, May 13, 2021

TSMC Says Fixing Global Auto Chip Drought A Priority

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Taiwan Semiconductor Manufacturing Company said that the rectification of a shortage of automotive chips was a “priority” as the world’s largest contract chip maker harvested quarterly demand for 5G smartphones.

Thursday’s pledge came after Volkswagen warned last month that a shortage of auto chips in the Chinese market could halt production at the German automaker. Honda said last week it would temporarily close a UK factory due to shortages.

“The automotive supply shortage has become more evident. At TSMC, this is our top priority, ”said CC Wei, Managing Director, whose group also manufactures chips for major electronics brands, including Apple.

“The automotive industry needs a lot of semiconductor components. . . as a mature technology for sensors and power management. We are working with customers to mitigate the impact of the shortage, ”he added.

Mr Wei explained that an increase in demand from automakers for chips at the end of 2020 had been difficult to meet, given that TSMC’s supply had already been squeezed by a strong appetite earlier in the year. year from other manufacturers.

TSMC’s fourth-quarter revenue grew 14% year-over-year to NT $ 361 billion ($ 12.7 billion), the company said on Thursday, reaching the peak of its own estimates. Net profit increased 23 percent year over year to NT $ 143 billion.

The group’s revenues in 2020 were driven by demand for smartphones and supercomputersthe company said, as well as the wholesale purchase of chips by customers concerned about the coronavirus pandemic disrupting supply chains.

TSMC, which supplies half of the global foundry market, is closely watched by investors as an indicator of global chip demand. Its New York-listed shares have doubled in the past year.

“The world needs advanced silicon and only TSMC has it,” Bernstein analyst Mark Li wrote in a note Tuesday.

However, TSMC has been affected by the US push to isolate Chinese telecommunications group Huawei. In May, Washington reinforced sanctions to prevent global vendors, including TSMC, from selling certain chips to Huawei. The Chinese company accounted for about 10 percent of TSMC’s revenue.

TSMC said it expects its revenue growth to fall in “the middle of adolescence” in 2021, after jumping 25% last year. The company expects revenue for the first quarter of 2021 to change little to $ 12.7 billion to $ 13 billion.

The company has raised its forecast for capital spending to $ 25 billion to $ 28 billion for this year, from $ 17 billion in 2020.

Analysts at investment bank Credit Suisse wrote that TSMC’s revenue growth in 2021-2022 would be supported by demand for 5G-enabled smartphones, as well as more orders from Apple. TSMC begins manufacturing the latest generation of Mac chips, after the American tech group abandoned its former partner Intel.

Intel’s declining competitiveness in the global foundry market is also a long-term boost for TSMC. Bernstein’s Li expects Intel, which designs and manufactures chips, to outsource some of its production to TSMC in 2023. This could add another 5-10% to TSMC’s revenue, a- he added.

Asked by analysts whether the increase in its capital spending was related to the outsourcing of Intel, the company declined to comment.

Additional reporting by Qianer Liu in Shenzhen

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