TSMC expected to raise 2020 capex for high end technologies

Taipei,  Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, is expected to raise its capital expenditure (capex) for 2020 to boost the development of the company’s advanced 5 nanometer and 3nm technology, according to a U.S.-based brokerage.

In a research note, the American securities firm said TSMC is likely to announce it will raise its 2020 capex from the current range of US$16-17 billion to US$17.5 billion at an investor conference scheduled for Thursday.

Many investors at home and abroad have stayed upbeat about the upcoming investor conference, expecting the company to deliver positive leads by detailing third quarter results and providing fourth quarter guidance.

At an earlier investor conference held in mid-July, TSMC hiked its capex by US$1 billion to the current level, citing strong demand for 5G applications and HPC devices.

The U.S. brokerage said TSMC’s capex is expected to rise still further to US$19.5 billion in 2021 as the chipmaker has made much effort to develop the 5nm and 3nm processes.

The 5nm process is the latest technology for which TSMC has launched commercial production since the second quarter of this year. The company is scheduled to start mass production of the 3nm process in the second half of 2022.

The brokerage said TSMC is expected to post a 2-3 percent sequential increase in consolidated sales in the fourth quarter.

In the third quarter, TSMC’s consolidated sales hit a quarterly record of NT$356.43 billion (US$12.29 billion), up 14.71 percent from a quarter earlier despite sanctions imposed by the U.S. Department of Commerce on Chinese telecom equipment maker Huawei Technologies Inc.

The brokerage said TSMC’s sales for 2020 are expected to grow 26 percent from a year earlier and growth for 2021 is expected to hit about 10 percent on the back of strong demand from Apple Inc. for its 5nm process.

The securities house said it has raised its forecasts for TSMC’s earnings per share by 6 percent, 9 percent and 11 percent, respectively, in 2020, 2021 and 2022 to NT$19.35, NT$20.61 and NT$24.23, compared with NT$13.32 in 2019.

The brokerage has also upgraded its target price on TSMC from NT$500 to NT$550, while leaving an “overweight” rating on the stock unchanged.

On Tuesday, TSMC shares rose 0.43 percent to close at NT$462.00 serving as an anchor stabilizing the local main board, where the weighted index ended down 0.07 percent.

 

Source: Focus Taiwan News Channel

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