FT.com / Technology – TSMC plans record $4.8bn investment
Taiwan Semiconductor Manufacturing Company, the world’s biggest contract chipmaker, plans to invest a record $4.8bn this year to expand advanced chipmaking capacity.
Morris Chang, founder and chief executive, said the investment – the most TSMC has spent in one year – would allow it to consolidate its leadership both in terms of market share and technological capabilities.
“We do not expect a situation where capacity will exceed demand, nor do I expect there to be a price war” in chips made using those technologies, he said.
TSMC commands roughly half of the worldwide contract chipmaking market and its clients hail from nearly the full spectrum of digital products.
Its heavy capital investment is therefore seen as a vote of confidence in the continued recovery of the broader technology and consumer electronics industry.
It is also a challenge to Globalfoundries, the new contract chipmaker spun off from AMD and backed by Abu Dhabi. Globalfoundries, which is building an advanced chip factory in New York state and last September acquired Singapore-based Chartered Semiconductor for $3.9bn, has likewise said it wanted to focus on cutting-edge technologies.
TSMC posted some of its strongest quarterly results since the financial crisis on Thursday – net profit reached T$32.7bn ($102m), 7 per cent higher than the previous quarter.
“We are near to or at 100 per cent utilisation across the board, even for 0.5 microns, which is 13-year-old technology … TSMC’s outlook for 2010 is very good,” the company said.
The results are a far cry from a year ago, when TSMC posted its biggest profit decline in seven years and placed part of its staff on no-pay leave because it was not getting enough orders for its factories.
Mr Chang said, however, that much of the recovery in the worldwide semiconductor industry this year would be driven by memory chipmakers. These companies include South Korea’s Samsung, the world’s biggest memory chipmaker, and Japan’s Elpida, which on Thursday posted its first quarterly net profit in more than two years.
Elpida, which makes dynamic random access memory chips, posted a Y21bn ($233m) net profit for the company’s third fiscal quarter and said sales were partly driven by consumers upgrading their computers after Microsoft launched Windows 7, its latest operating system.
Yasuo Shirai, chief financial officer, said he expected D-ram chip prices to remain relatively stable this year. This is despite a strong recovery in D-ram prices towards the end of last year.
Elpida also said it planned to invest $30m to $50m to set up a research and development centre at Rexchip, it’s Taiwan subsidiary.