Sunday, October 16th 2022
TSMC Cuts Back CAPEX Budget Despite Record Profits
Another quarter, another record breaking earnings report by TSMC, but it seems like the company has released that things are set to slow down sooner than initially expected and the company is hitting the brakes on some of its expansion projects. The company saw a 79.7 percent increase in profits compared to last year, with a profit of US$8.8 billion and a revenue of somewhere between US$19.9 to US$ 20.7 billion for the third quarter, which is a 47.9 percent bump compared to last year. TSMC's 5 nm nodes were the source for 28 percent of the revenues, followed by 26 percent for 7 nm nodes, 12 percent for 16 nm and 10 percent for 28 nm, with remaining nodes at 40 nm and larger making up for the remainder of the revenue. By platform, smartphone chips made up 41 percent, followed by High Performance Computing at 39 percent, IoT at 10 percent and automotive at five percent.
TSMC said it will cut back its CAPEX budget by around US$4 billion, to US$36 billion, compared to the earlier stated US$40 billion budget the company had set aside for expanding its fabs. Part of the reason for this is that TSMC is already seeing weaker demand for products manufactured using its N7 and N6 nodes, as the N7 node was meant to be a key part of the new fab in Kaohsiung in southern Taiwan. TSMC is expecting to start production on its first N3 node later this quarter and is expecting the capacity to be fully utilised for all of 2023. Supply is said to be exceeding demand, which TSMC said is partially to blame on tooling delivery issues. TSMC is expecting next year's revenue for its N3 node to be higher than its N5 node in 2020, although the revenue is said to be in the single digit percentage range. The N3E node is said to start production sometime in the second half of next year, or about a quarter earlier than expected. The N2 node isn't due to start production until 2025, but TSMC is already having very high customer engagement, so it doesn't look like TSMC is likely to suffer from a lack of business in the foreseeable future, as long as the company keeps delivering new nodes as planned.
Sources:
TSMC, via @dnystedt
TSMC said it will cut back its CAPEX budget by around US$4 billion, to US$36 billion, compared to the earlier stated US$40 billion budget the company had set aside for expanding its fabs. Part of the reason for this is that TSMC is already seeing weaker demand for products manufactured using its N7 and N6 nodes, as the N7 node was meant to be a key part of the new fab in Kaohsiung in southern Taiwan. TSMC is expecting to start production on its first N3 node later this quarter and is expecting the capacity to be fully utilised for all of 2023. Supply is said to be exceeding demand, which TSMC said is partially to blame on tooling delivery issues. TSMC is expecting next year's revenue for its N3 node to be higher than its N5 node in 2020, although the revenue is said to be in the single digit percentage range. The N3E node is said to start production sometime in the second half of next year, or about a quarter earlier than expected. The N2 node isn't due to start production until 2025, but TSMC is already having very high customer engagement, so it doesn't look like TSMC is likely to suffer from a lack of business in the foreseeable future, as long as the company keeps delivering new nodes as planned.
40 Comments on TSMC Cuts Back CAPEX Budget Despite Record Profits
Guess who's gonna pay for that...
www.bloomberg.com/news/articles/2022-09-28/apple-iphone-14-sales-not-strong-enough-to-trigger-production-boost
Only the iPhone Pro / Apple A16 is on N4 and that is still a "5nm" node "marketed" as "4nm". It's 6% more dense than N5, not a notable difference at all, most nodes have variations (low power, high power etc.) that can be +/- 15%
They've never taken this long to go to a new node with the iPhone.
TSMC to its investors: We are pleased to announce yet another quarter of record-breaking profits!
Hmm. I'm starting to suspect that these semiconductor companies aren't operating honestly...
Cut the cord Intel and become fab only. You can make so much more money and help satisfy global chip demand in the process.
Oh and the spun off chip business can use the ARM model and license X86 and other IP.
Intel's chips have only gotten slightly more expensive over the years, not counting for inflation.
Pretty obscene amount of cash. I wonder what capex is getting cut back?? The plant being built in the states?
In addition, this move is in response to a global recession and massive drop in worldwide chip demand. Not due to a slowdown in node processes advancement. This was a long time coming, people purchased a ton of chips during the pandemic and now the pendulum has swung the other way.
This isn't a matter customers should be tackling alone, governments should keep a close eye on chip manufacturing and prices as it is now of the upmost import to national security and the economy. Companies should absolutely not be able to charge whatever they want for what is increasingly becoming a necessity to operate in the modern world.
edit: Apparently there was an update to this story that I missed: www.macrumors.com/2022/10/05/apple-agrees-to-tsmc-chip-price-hike/
Disappointing.