TSMC said it would cut its capital expenditure (Capex) for 2022 to around $36 billion in the wake of delay in procuring tools and other semiconductor equipments.
In July, TSMC said it would skim the lower end of its previous Capex guidance of $40 billion to $44 billion this year, with some expenses pushed to next year because of a delay in the delivery of some chip-making equipment.
“About half of the change is due to capacity optimization based on the current medium-term outlook and the other half is due to continued tool delivery challenges,” TSMC Chief Financial Officer Wendell Huang told a media call.
TSMC’s quarterly profit surged 80 percent on strong sales of its chips used in data centers and electric cars.
TSMC’s dominance in making some of the world’s most advanced chips for high-end customers such as Apple and Qualcomm had shielded it from the downturn flagged by chipmakers including AMD and Micron Technology.
Taiwan Semiconductor Manufacturing Co (TSMC) flagged on Thursday challenges from rising inflationary costs next year.
It comes as the chip industry is dealing with weak demand, spurred by decades-high inflation, rising interest rates and COVID 19-related lockdowns in China that have hurt the PC and smartphone market as businesses and consumers rein in expenses.
For the fourth-quarter, the world’s largest contract chipmaker forecast a 29 percent rise in revenue to between $19.9 billion and $20.7 billion, compared with $15.74 billion a year earlier.
“From the Intel and Nvidia profit warnings to negative outlooks from Samsung, AMD, Kioxia and Micron, it is clear that semiconductor demand is losing momentum. Yet, TSMC managed to deliver growth and provide an outlook above market expectations,” Josep Bori, Thematic Research Director at GlobalData, said.
TSMC’s advanced technologies (i.e., 5 and 7-nanometer nodes) accounted for 54 percent of total wafer revenue, up from 51 percent last quarter. This manufacturing technology leadership places TSMC front and center of any country’s artificial intelligence (AI) strategy, as advanced AI chips require this miniaturization level.
“While today the focus is likely to be on TSMC’s solid results, the fundamental question in the coming months is how the likes of TSMC, Samsung, and ASML will react to broader restrictions on the export of advanced chips and tools to China announced last Friday,” Josep Bori said.