TSMC's Q3 revenue may hit $14.9 bil, boom time for Taiwan chipmakers
By Gloria Cho
TAIPEI, NNA - Record revenues have continued to roll in for Taiwan chipmakers led by Taiwan Semiconductor Manufacturing Co.(TSMC) which expects to see yet another bumper income for this quarter.
The world’s largest contract chipmaker said its Q3 revenue is likely to rise beyond $14.6 billion and may reach $14.9 billion.
In a press statement on July 15, Wendell Huang, vice president and chief financial officer of TSMC, said, “Moving into third quarter 2021, we expect our business to be supported by strong demand for our industry-leading 5nm and 7nm technologies, driven by all four growth platforms, which are smartphone, HPC, IoT and automotive-related applications.”
Driven mainly by continued HPC (high-performance computing) and automotive-related demand, second-quarter revenue at TSMC soared 28 percent to $13.29 billion from a year ago and rose 2.9 percent from the first quarter which already had a good showing.
In the second quarter, shipments of 5-nm chips accounted for 18 percent of total wafer revenue, with 7-nm ones contributing 31 percent. Advanced chips generated a handsome 49 percent.
Smartphone chips accounted for 42 percent of Q2 revenue, down 3 percent on quarter, while the contribution from HPC chips surged by 12 percent to 39 percent.
During an analyst call on July 15, TSMC CEO and vice chairman C.C. Wei said the global semiconductor market excluding memory chips is poised to grow by about 17 percent in 2021, helping the foundry sector to expand by 20 percent.
Digital transformation accelerated across the world by the COVID-19 pandemic and the scramble to stockpile chips after US-China geopolitical friction upset supply chains have resulted in a global shortage in chips.
Wei said, “In the near term, we continue to observe short-term imbalances in the supply chain driven by the need to ensure supply security as well as structural increase in long-term demand.”
The foundry expects its inventory to remain tight this year, and possibly, in 2022 because of the high demand for its advanced and special chip technologies.
Responding to the plight of car manufacturers having to curtail production for months, TSMC ramped up the capacity of MCU (microcontroller unit), a key component in cars, by 30 percent more in the first six months of this year compared with the same period in 2020. It expects the increase to go up to nearly 60 percent in the second half, said Wei.
He added that the chip crunch for the automotive industry should ease gradually from this quarter.
On expanding its global footprint, TSMC president and co-CEO Mark Liu said its $12 billion Arizona plant, now under construction, will churn out 20,000 wafers monthly using the 5-nm process in the first quarter of 2024, according to its schedule.
Liu said does not rule out the possibility of a second-phase plant development because of strong demand.
The chipmaker also plans to double the capacity of 28nm chips at its less-advanced fab in China’s Nanjing from the second half of 2022 to meet the urgent needs of clients. The target is 40,000 wafers per month by mid-2023, said Liu.
He said, “For the long term, we forecast that 28nm will be the sweet spot for our embedded memory applications, and our structural demand for 28nm will be strongly supported by multiple specialty technologies.”
The chipmaker is also mulling over a plan to set up a speciality technology wafer plant in Japan.
Meanwhile, TSMC’s smaller Taiwanese rivals such as Vanguard International Semiconductor Corp. (VIS) and United Microelectronics Corp. (UMC) are also expecting the chip boom to continue after achieving record revenues in Q2 too.
Eight-inch foundry VIS steamed ahead with a revenue of NT$10.16 billion ($361.9 million), a robust jump of 23.4 percent from a year ago. This was helped by a 5 percent increase in prices for booming orders for automotive chips, driver and power integrated circuits.
UMC revenue increased 14.7 percent to NT$50.9 billion.
Both companies are also ramping up capacity to meet demand. UMC will fork out $3.6 billion over the next three years to boost its 28nm production by 27,500 more wafers monthly.
VIS has increased its capital expenditure to NT$8.5 billion to expand its Taoyuan fab capacity to yield 8,000 to 10,000 more wafers a month. It is also boosting production at its Singapore fab. The contract chipmaker expects its overall monthly output to attain 25,000 wafers by year-end.
As of December 2020, Taiwan led the world with 21.4 percent of global wafer capacity on home ground. Close behind is South Korea with a 20.4 percent share, and Japan with 15.8 percent, according to an IC Insights report.
Taiwan is expected to remain dominant with nearly 1.4 million wafers added to monthly fab capacity between 2020 and 2025.