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September 25, 2017

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Power supply will affect investment decisions: TSMC

TAIPEI, Taiwan --In the wake of the nuclear power plant construction debate, Taiwan Semiconductor Manufacturing Company (TSMC, 台積電) said power supply is likely to affect its capital investment decision in coming years.

Whether or not to continue the construction of the Fourth Nuclear Power Plant has turned into a controversial issue. TSMC, the world's largest contract chip-maker, would not comment on the government's decision to halt Nuke 4's construction.

Some worry that scrapping Nuke 4 will impact local electricity supplies and hike electricity prices. According to TSMC, a stable utility supply is indeed a crucial factor to ensure smooth plant operation. While utility is a relatively small portion in TSMC's cost structure, its future investment will depend on whether or not there is a reliable power supply.

TSMC, a local blue chip company, has formed close working relations with Apple Inc., Qualcomm Inc. and MediaTek Inc. (聯發科). In order to meet its orders, TSMC has said it intends to make more capital investments, amounting to US$10 billion in coming years, in an effort to expand its higher-level manufacturing facility. TSMC makes the largest capital investment in Taiwan.

Although it does not want to see a hike in utility prices, should this happen, TSMC said it will have no option but to accept it, as it needs stable and uninterrupted power supply.

TSMC is the sole contractor charged to manufacture Apple Inc.'s A8 processor. It is also expected to churn out Apple's next generation A9 processor. TSMC in the first quarter hastened its pace to streamline its 20- and 16-nano manufacturing processes. Sources said the company intends to churn out 110,000 chips per month via these processes by the end of 2015.

Analysts believe that electricity supply will affect TSMC's wafer foundry expansion, and consequently the company's business operations and local employment. It is likely to have ramifications in the global supply chain in the electronics industry.

Foreign investors were optimistic about TSMC's future performance. Investors overbought TSMC stocks in the last two days. It closed at NT$120.5 yesterday, up 1.26 percent.

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