Report: TSMC to announce record-high $20 billion capital expenditure for 2021

TSMC is no longer taking orders from Huawei.

Taiwanese Semiconductor Manufacturing Corporation (TSMC) will announce plans to spend a record-high $20 billion in 2021. Central News Agency (CAN), Taiwan’s national media organization, reports the firm will declare its capital expenditure plans at its January 14 investors meeting. Last year, it initially set $15 billion as its annual spending goal before raising its limit to $17 billion.

Financial analysts anticipate the pure-play foundry will direct its resources to expand its production capacity and advancing its manufacturing technology.

TSMC’s is Spending Heavily to Maintain Its Position

TSMC is currently the world’s second-largest chipmaker by market capitalization behind Samsung thanks to its blockbuster financial performance in 2020. The firm experienced significant growth last year because it was the only foundry capable of mass-producing leading-edge 5nm semiconductors. The East Asian company intends to fortify its position this year by executing a costly strategy.

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First up, the corporation intends to expand its component fabrication capability in light of strong demand.

The foundry’s customers, including Apple, Arm, Qualcomm, and MediaTek, reportedly booked almost all of its 5nm production capacity through 2021. On the one hand, TSMC will benefit financially from keeping its factories running at their peak output level. But on the other, it cannot take on any new 5nm orders while its manufacturing lines are booked.

TSMC is addressing the issue by acquiring more manufacturing equipment and building a new 5nm fab in Arizona. However, the firm pays around $123 million for each extreme ultraviolet lithography (EUV) machine it uses to fabricate its latest chips. The corporation also committed to spending $12 billion to establish its new 5nm Silicon Desert plant by 2024.

In addition, the foundry will likely burn through a lot of capital this year to further extend its semiconductor fabrication leadership.

TSMC’s 3nm and 2nm Plans

Last August, TSMC revealed it would begin volume manufacturing of 3nm chipsets in the second half of 2022. The firm claims its next-generation node offers a 10 to 15 percent performance upgrade with a 25 to 30 percent reduction in power consumption. The company has supposedly set aside $19.6 billion to get a dedicated 3nm facility up and running by 2023.

Industry insiders claim the foundry will use its advancing fabrication process to make Apple’s future smartphone and computer chipsets.

TSMC is also pouring lots of research and development dollars into its 2nm node. The company intends to begin trial manufacturing with the technology in 2023 and mass production in 2024. It is in the process of setting up an advanced factory in Taiwan to facilitate its roadmap. The firm reportedly began looking into the financial viability of establishing a second 2nm factory in its home country last September.

Since the corporation utilizes EUV tech in its 3nm and 2nm nodes, it will need to acquire more $123 million machines.

Given what it spent last year, TSMC setting $20 billion as its 2021 capital expenditure target is a logical escalation. But if it sees intensifying demand from its customers, it may raise its spending limit as it did in 2020. That begs the question as to how long the chipmaker, even with its resources, can afford to remain a state-of-the-art contract semiconductor manufacturer.


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