Taiwanese Semiconductor Manufacturing Company (TSMC) announced it generated $12.67 billion in the fourth quarter of 2020, up 22 percent year-over-year. The firm also revealed the plans to make between $25 billion and $28 billion in capital expenditures (capex) this year.
The world’s largest contract chipmaker garnered record quarterly revenue last period because of its industry-leading wafer fabrication technology. Based on its 2021 spending plans, it intends to cement its dominant market position by expanding its production capacity and increasing its technological sophistication.
TSMC’s Massive Q4 2020 and Full Year Earnings
Although TSMC had a banner year in 2020, its Q4 earnings still edged out Wall Street’s projections.
The company’s impressive sales growth last period is largely due to its close relationship with Apple. The firm produced 5nm processors for the Big Tech giant’s latest flagship smartphones and laptops. Since its current-generation chips are priced higher than products made with older nodes, it enjoyed a big bump from the electronics makers’ most recent product refresh.
The foundry also saw an uplift in sales from intense demand for high-performance computing chips from the data center market.
In fact, TSMC derived 20 percent of its gross income for selling 5nm components. By comparison, the pure-play foundry only made 8 percent of its income from its advanced process in Q3 2020. That said, 29 percent of its intake came from its 7nm node in the holiday quarter, which underscores the benefits of offering a diverse range of services.
The chipmaker reported making $45.5 billion in 2020, a 25.2 percent improvement on its full-year 2019 sales. Its all-time high income is notable because it encountered many challenges in the last 12 months, including dealing with the impact of COVID-19 and the ending of its partnership with Huawei.
Ultimately, the firm’s appealing extreme ultraviolet lithography (EUV) technology and amble production capacity helped it overcome those headwinds.
TSMC’s Predicts 2021 Capex at $28 Billion
Having set a new revenue record in 2021, TSMC plans to spend up to $28 billion this year to keep the hot streak going.
The foundry’s planned capex greatly exceeds the $17.2 billion it spent last year. According to Bloomberg’s analysis, its expected financial outlay represents 52 percent of its projected 2021 revenue. That said, the company has some costly plans on its near-term roadmap.
The firm is building a new $12 billion fab in Phoenix and will need to buy several $123 million EUV machines to equip it properly. The manufacturer is also in the process of establishing two new cutting-edge packaging facilities in its home country. And it will start risk production on its 3nm node later this year with mass fabrication in the second half of 2023.
If everything goes well, TSMSC’s strategy will enable it to maintain its place as the top vendor in its field. While its budget reflects a high amount of confidence from its leadership, its outlook is not unreasonable.
For Q1 2021, TSMC anticipates bringing in $12.7 billion to $13 billion with a gross profit margin of 50.52 to 52.5 percent. That means it expects to beat its Q1 2020 sales by up to 26.21 percent and its net income by 27.92 percent.
In addition, Citigroup believes Intel will select TSMC to manufacture its next-generation semiconductor products. The foundry can reportedly begin making the American company’s 4nm chips by next year. As a result, its 2021 income would see a big boost from its advanced orders.
Provided it secures a contract for Intel’s business, TSMC may have a new best year ever in 2021.