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May 29, 2017

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TSMC board approves capital expenditure raise

Reports indicate that TSMC's board of directors on Tuesday approved an additional NT$91 billion in capital expenditure allocations for this year.

The additional capital is slated to fund the company's efforts to expand holds in the mobile device and Internet of Things (IoT) markets and expand assets, including clean room facilities, plants and equipment, in addition to meeting routine recurring costs. A portion of the NT$91 billion will be directed toward developing custom logic integrated circuit fabrication technologies for clients, according to reports.

Previously during its earnings conference, the company announced that total capital expenditure this year is expected to reach between US$9.5 billion and US$10 billion. The company, however, noted that it is inevitable that capital expenditure will slowly decline in proportion to revenues gradually in the near future.

Most notably, sales of 28-nanometer chips have risen to be the company's main focus, accounting for 37 percent of overall revenues, while 20-nanometer sales are expected to enter the mass production phase, representing 10 percent of sales before the end of the current quarter and expanding two-fold to 20 percent at the end of the final quarter of this year.

Institutional investors stated that they are expecting the revenues derived from the company's 20-nanometer chips to grow by 28 percent on an annual basis in 2015, with its 16-nanometer chip fabrication to enter the mass production phase before the third quarter of next year. Although both the 16-nanometer and 20-nanometer thus far this year had only yielded single-digit representation of overall sales, the two die shrinks are expected to become TSMC's main revenues source in the next three years, said institutional investors.

Most notably, as TSMC's 16-nanometer fabrication technology is deemed superior than rivaling 14-nanometer offerings by competitors, the company is poised to take a lion's share of Apple's upcoming chip order.

The TSMC board of directors also approved of a NT$2 billion capital injection for the TSMC Global Ltd., a wholly owned subsidiary firm registered in the British Virgin Islands, in an effort to satisfy foreign exchange risk hedging needs at minimal cost.

16nm Enters Trial Run in Q3

Meanwhile, reports indicate that in a bid to preserve its technical lead over rivaling Samsung and Intel, TSMC's 16-nanometer FinFET semiconductor process is poised to enter the trial production run phase in the third quarter of this year.

China's leading IC design company Hisilicon (海思) is rumored to TSMC's first client to utilize the new 16-nanometer FinFET fabrication, tasking the Taiwanese company to build its 64-bit Kirin 930 chip under the big.LITTLE power-optimized heterogeneous computing architecture developed by ARM Holdings.

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