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TSMC Profit beats estimates thanks to extended Chip Crunch




(Bloomberg) – Taiwan Semiconductor Manufacturing Co. raised its revenue growth forecasts and unveiled plans to spend as much as $ 44 billion on expansion in 2022, signaling confidence that voracious demand for iPhones and chips will persist for years.

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Apple Inc.’s most important chipmaker now estimates average sales growth of 15% to 20% annually – as much as double previous expectations. It estimates sales of $ 16.6 billion to $ 17.2 billion in the first quarter alone, at least 5% before estimates.

These figures confirm TSMC’s leading position in the market during a unique chip shortage triggered by the pandemic, a deficit that has ruined the production of cars, mobile phones and game consoles. Asia̵[ads1]7;s most valuable company intends to continue to use heavily to maintain its technological leadership over Intel Corp. to Samsung Electronics Co., and secure its market share as the growing number of connected devices such as automobiles operate data centers and advanced computing.

While the crisis shows no signs of slowing down, TSMC has been operating at almost full capacity over the past year and is now investing heavily in new factories from its home island to Japan and the United States. It intends to spend $ 40 billion to $ 44 billion on expanding and upgrading capacity by 2022, up more than $ 10 billion from last year.

Click here for a blog that summarizes TSMC’s conference call after earnings.

Delivery times for chips increased by six days to about 25.8 weeks in December compared to November, according to surveys by Susquehanna Financial Group. This lag marks the longest wait since the company began tracking the data in 2017.

The endemic deficiency has been a boon for chipmakers. On Thursday, the Taiwanese company reported a better-than-expected jump of 16% in net revenue in December to a record high of NT $ 166.2 billion ($ 6 billion). It set a long-term target of at least 53% for gross margins. Sales for the quarter reached NT $ 438.2 billion, also a record, based on previously released monthly revenue figures.

What Bloomberg Intelligence says:

TSMC’s investment plan for 2022 of up to $ 44 billion seems to enable it to capture high growth in leading and specialized technology nodes and support its percentage sales growth target of 15-20% CAGR. Its $ 12 billion net cash position, combined with consistent cash flow from operations, appears to support the significant capacity expansion plan while maintaining dividend payments. The company has the capacity to take on more debt without significantly damaging its financial calculations.

– Cecilia Chan and Dan Wang, analysts

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TSMC needed to increase investment plans because they need to expand capacity to take full advantage of the boom. The company had originally set aside a total of $ 100 billion to increase production over the three years to 2023, and announced plans for a new facility in Japan and Arizona. It is also in discussions about production in Europe, although these discussions are more preliminary.

To secure supplies, more customers are now paying in advance, compared to just one or two in the past. TSMC took $ 6.7 billion in advance payments in 2021, executives said.

“The growth of the semiconductor industry will continue to be driven by the structural megatrends of 5G and high-performance computing,” board chairman Mark Liu told analysts at a conference call on Thursday.

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