TSMC posts record Q4 2021 profit, to boost chip spending this year

Taiwan chip firm TSMC posted on Thursday a 16.4% rise in fourth-quarter profit to a record, thanks to huge global demand for semiconductors, and said it expected to spend at least a third more than last year to make advanced chips.

Soaring demand for semiconductors used in smartphones, laptops and other gadgets during the COVID-19 pandemic has led to an acute chip crunch, forcing automakers and electronics manufacturers to cut production but has kept order books full at TSMC and other chipmakers.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), a major Apple Inc supplier that also has customers such as Qualcomm Inc, said it expects to lift capital spending to between $40 billion and $44 billion this year. Last year it spent $30 billion.

TSMC announced in 2021 a $100 billion expansion plan over the next few years, as new technologies such as fifth-generation (5G) telecommunications technology and artificial intelligence applications also drive chip demand.

The company is entering “a period of higher structural growth”, Chief Executive C. C. Wei told an online earnings briefing on Thursday, supported by strong chip demand from new technologies including 5G.

TSMC, Asia’s most valuable listed firm and globally the largest contract chipmaker, expects capacity to remain tight this year and demand to be sustained in the long term, Wei said.

“With fully-loaded foundry capacity, TSMC’s near-term order outlook remains healthy,” analysts at Taipei-based Fubon Research wrote in a note in early January.

TSMC forecast first-quarter revenue to be in the range of $16.6 billion to $17.2 billion, compared with $12.92 billion in the same period a year earlier. For the year, it expects to grow in the mid -to-high 20% range in U.S. dollar terms.

In the October-December quarter, revenue climbed 24.1% to $15.74 billion. Net profit rose to T$166.2 billion ($6.01 billion) from T$142.8 billion a year earlier.

That was higher than the T$161.6 billion average of 22 analyst estimates compiled by Refinitiv.

TSMC shares have gained about 7% so far this year, giving it a market value of $618 billion. The stock closed 0.15% higher on Thursday before the financial results were released, slightly underperforming the broader market which finished up 0.33%.

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