(Bloomberg) — Taiwan Semiconductor Manufacturing Co. forecast fourth-quarter gross sales and margins that exceeded some analysts’ estimates, as demand for chips stayed strong within the face of worsening snarls within the provide chain.
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The world’s No. 1 foundry stated Thursday it expects income of as a lot as $15.7 billion within the three months ended December, serving to full-year gross sales develop by about 24% in greenback phrases. Gross margin could also be as excessive as 53%, with executives reiterating a long-term goal of greater than 50%. Analysts had anticipated common gross sales of $15.3 billion and margin of 51.4% for the December quarter.
TSMC’s manufacturing will seemingly stay stretched via 2022, as demand for semiconductors that energy every thing from vehicles to the newest smartphones drove lead occasions to file highs and helped fill order books. So as to safe provides, extra prospects are actually paying upfront, in contrast with simply “one or two” earlier than. However capability constraints have restricted the Taiwanese firm’s means to totally capitalize on the growth, even because it put aside $100 billion to develop output over three years and introduced plans for a brand new plant in Japan.
“We count on TSMC’s capability to stay very tight in 2021 and all through 2022,” Chief Government Officer C.C. Wei stated on a convention name. “Whereas the short-term imbalances might or might not persist, we imagine our expertise management will allow TSMC to seize the sturdy demand for our superior and specialty applied sciences.”
Learn extra: Apple’s supply-chain challenges
Bottlenecks elsewhere within the provide chain, together with in packaging and testing, in addition to snarls in logistics have weighed on the business. Apple Inc., which accounts for 1 / 4 of TSMC’s income as its greatest buyer, is prone to slash its projected iPhone 13 manufacturing targets this yr by as many as 10 million models, Bloomberg Information reported this week.
Web revenue for the three months ended September rose a stronger-than-expected 14% to NT$156.3 billion ($5.6 billion) on file income of NT$414.7 billion. Gross margin within the September quarter was a better-than-expected 51.3%, following enhancements in “backend profitability and a extra favorable expertise combine,” TSMC stated. It’s rebounding from an almost two-year low reached within the earlier three months, partly due to foreign money fluctuations.
TSMC will seemingly increase costs subsequent yr, Taiwanese media reported in August, a transfer that might assist offset considerations over margins. Executives declined to touch upon the reported will increase, saying solely that its pricing technique is “strategic, not opportunistic.”
“TSMC would be the final foundry to boost pricing through the ongoing semis scarcity as some friends have already enacted two to 3 will increase,” Cowen Inc. analysts led by Krish Sankar wrote in a Oct. 11 report. “We count on semis shortages will ease by 2H22 as incremental foundry business capability come on-line.”
Probably the most superior applied sciences accounted for 52% of TSMC’s income through the quarter, with 5 nanometer making up 18% and seven nanometer 34%. Improvement of 3-nanometer expertise is “on observe,” with mass manufacturing anticipated within the latter half of 2022, executives stated Thursday.
“N3’s value is certainly larger than N5, that’s due to expertise complexity and now we have to make use of quite a lot of new gear, which has a better value,” Wei stated. “The ramp-up is similar to the earlier node, with many shoppers’ engagement truly larger than what we noticed within the earlier node.”
Smartphones proceed to be the biggest contributor by product sort at 44% of complete income, whereas automotive prospects made up 4% of income, consistent with the earlier quarter. TSMC has stated it’s going to enhance shipments to the sector, which has been among the many most badly affected by provide shortages.
“Current components such because the pandemic in Southeast Asia is affecting the automotive IC provide,” Wei stated, including that the corporate’s share of the worldwide auto chip market is about 15%. “We can not remedy all the business’s provide chain problem.”
TSMC will construct a specialty expertise fab in Japan beginning in 2022, with manufacturing anticipated two years later, Wei instructed analysts Thursday. The corporate has assist from the Japanese authorities for the fab, which will likely be for the extra mature 22- and 28-nanometer applied sciences. Its personal board nonetheless must formally approve the plan, and funding within the facility will likely be “incremental” to the $100 billion capital spending it had beforehand introduced.
(Updates with outlook, firm feedback all through.)
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