The Taiwanese semiconductor manufacturing company said eliminating the shortage of car chips was a “priority” as the world’s largest chip maker reaped a quarterly increase in demand for 5G smartphones.
The promise was made on Thursday when Volkswagen warned last month that a shortage of car chips in the Chinese market could halt production by the German carmaker. Honda announced last week that it will temporarily close its factory in the UK due to shortages.
“The lack of car care has become more apparent. At TSMC, this is our top priority, ”said CC Wei, CEO, whose group also makes chips for leading electronic brands, including Apple.
“The automotive industry needs a lot of semiconductor components. . . such as mature sensor technology and power management. We work with customers to mitigate the impact of shortages, ”he added.
Mr Wei explained that the increase in car manufacturers’ demand for tokens at the end of 2020 was difficult to achieve, as TSMC’s supply had already squeezed sharply at other manufacturers at the beginning of the year.
TSMC’s fourth-quarter revenue rose 14 percent year-over-year to NT 361 billion ($ 12.7 billion), the company said Thursday, reaching its own estimates. Net income rose 23 percent year-on-year to NT 143 billion.
The group’s revenue in 2020 was boosted by demand for smartphones and supercomputers, the company said, as well as chip purchases in bulk by customers worried about a coronavirus pandemic disrupting supply chains.
The TSMC, which supplies half of the global foundry market, is being closely monitored by investors as an indicator of global token demand. Its shares listed on the New York Stock Exchange have doubled in the past year.
“The world needs advanced silicon and only TSMC has it,” Bernstein analyst Mark Li wrote on Tuesday.
TSMC, however, was influenced by U.S. pressure to isolate China’s telecommunications group Huawei. In May, Washington tightened sanctions to prevent global suppliers, including TSMC, from selling certain chips to Huawei. The Chinese company accounted for about 10 percent of TSMC’s revenue.
TSMC said it expects revenue growth to drop to “middle teens” in 2021 after jumping 25 percent last year. The company expects revenue to change slightly in the first quarter of 2021 to $ 12.7 to $ 13 billion.
The company has raised forecasts for its capital expenditures for this year to $ 25 billion to $ 28 billion, compared to $ 17 billion in 2020.
Analysts at investment bank Credit Suisse wrote that TSMC’s revenue growth in 2021-22 will be supported by demand for 5G smartphones and more Apple orders. TSMC is starting to make Apple’s latest generation of Mac chips after the U.S. technology group stepped down from former partner Intel.
Intel’s declining competitiveness in the global foundry market is also a longer-term incentive for TSMC. Mr. Li Bernstein expects Intel, which designs and manufactures the chips, to leave part of its production in 2023 to TSMC. That could add an additional 5-10 percent of TSMC’s revenue, he added.
Asked by analysts whether its increase in capital expenditures was related to Intel’s outsourcing, the company declined to comment.
Additional reporting by Qianer Liu of Shenzhen