TSMC shares edged towards fresh highs in Taiwan after raising growth projections and unveiling record spending, underscoring expectations the voracious demand that fuelled a global chip crunch will persist.
The world’s largest foundry jumped as much as 1.8%, boosting the benchmark Taiex index. Apple’s most important chip maker is now projecting average sales growth of 15-20% annually — as much as double its previous expectation. It intends to spend US$40-billion to $44-billion expanding and upgrading capacity in 2022.
Those numbers affirm TSMC’s pole position in the market during an unprecedented chip shortage triggered by the pandemic, a deficit that’s walloped the production of cars, mobile phones and game consoles. It’s spending heavily to maintain its technological lead over Intel to Samsung Electronics, safeguarding its market share as the growing number of connected devices like cars drive data centres and high-end computing.
TSMC has been running at near-full capacity over the past year and is now investing heavily in new fabs from its home island to Japan and the US. TSMC’s 2022 spending target is up at least $10-billion from last year and more than 43% higher than the $25-billion to $28-billion Intel has set aside this year to regain its once-dominant position.
The squeeze has been most notable in industries including car manufacturing, wiping out an estimated $200-billion in sales for car makers such as Volkswagen and General Motors last year. Even Apple, TSMC’s top customer, hasn’t been spared: the iPhone maker said it lost $6-billion in sales due to component shortages in the three months ended in September, while losses stemming from product constraints will exceed $6-billion in the holiday quarter.
Although an earlier share rally stalled after setting a record high in early 2021 — due to fallout from supply-chain issues — the Taiwanese chip maker still delivered an annual gain of 16%. Its market capitalisation has surged to NT$17.4 trillion ($627-billion), surpassing Tencent Holdings to make it Asia’s most valuable company.
TSMC is “well positioned” in the industry and has room for further price increases in the years to come, Randy Abrams, MD and head of Taiwan equity research at Credit Suisse Group, said in a television interview. — John Cheng, (c) 2022 Bloomberg LP