TSMC Earned Record Revenue In 2020 And Will Nearly Double 5nm Output In 2021 – Reports

Ramish Zafar

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

The Taiwan Semiconductor Manufacturing Company (TSMC) is rumored to increase its capital expenditure for this year to $22 billion according to reports in the Taiwanese press. This will mark for 30% growth over 2020 and it will come at a time when the fab is busy consolidating its lead in the global semiconductor area by mass-producing leading-edge semiconductor manufacturing process nodes.

TSMC Plans To Aggressively Increase 5nm Manufacturing Capacity To 100,000 pieces/month In 2021 Believe Industry Insiders

The new estimate is higher than what analysts had previously expected it to be. Due to the high costs of procuring extreme ultraviolet (EUV) lithography machines, TSMC was expected to allocate $20 billion in capital expenditure for 2021, and the bulk of the new estimate is again expected to be targetted towards expanding 5nm production, developing facilities for 3nm and researching and developing the 2nm process node.

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These rumors come as investment bank Morgan Stanley estimates that TSMC will earn NT$130.5 billion revenue in December - for a new all-time record high. This growth will come at a time when economies all over the globe enter their second year of battling pandemic-induced economic disruption and spending for consumer electronics such as laptops and smartphones rises due to remote working.

TSMC earned NT$125 billion revenue in November and should Morgan Stanley's estimates materialize, then December 2020 will mark the first time that the fab's revenue will have exceeded NT$130 billion. TSMC earned NT$ 1.2 trillion for the first eleven months of 2020, marking a 26.4% year-over-year growth, as its November revenues marked a 15.7% year-over-year and 4.7% quarter-over-quarter increase. The bank also expects that TSMC will maintain this growth trajectory this year, as it expects the company to earn NT$1.5 trillion in revenue this year.

Using lasers for EUV lithography.

Due to smaller circuits, manufacturing chips through the 5nm and lower nodes requires extensive use of EUV machines. The reports from the Taiwanese press also provide us with some figures for TSMC's 5nm and 3nm manufacturing capacities. The details suggest that the fab is currently capable of manufacturing 60,000 5nm wafers per month, with TSMC expected to increase this to 100,000 pieces per month in the second half of this year.

Additionally, they also provide crucial tidbits of information for 5nm's successor a.k.a. the 3nm node. At this front, it is believed that TSMC's initial production capacity will range between 10,000 and 30,000 pieces per month - and once the process rolls out its kinks, then its production capacity will exceed 5nm.

TSMC is set to hold its earnings call for the fourth quarter of last year next week on Thursday, where its management will provide details for revenue and capital expenditure. With trade tensions between the United States and China on the rise, the fab saw a big chunk of its orders originating from Chinese telecommunications company Huawei Technologies Ltd. disappear due to American sanctions against the company.

However, with Cupertino tech giant Apple Inc rumored to transition to in-house processors for its MacBook laptop lineup, TSMC is expected by many to be the sole beneficiary of the company's chip orders. It already manufactures processors for Apple' iPhone and iPad lineups, and its advances in semiconductor manufacturing have injected fresh air into Advanced Micro Devices, Inc's ability to compete with chip juggernaut Intel Corporation in the duopolistic x86 processor market.

The fab is also on its way to set up and operate a chip manufacturing facility in Arizona, United States, with its board having allocated a $3.5 billion capital investment for the facility in November. In this endeavor, TSMC will be aided by the city council of Pheonix, via $205 million in city funds. These funds will aim to provide the company with facilities such as wastewater disposal, which is an integral part of chip fabrication due to purity requirements.

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