TSMC plans to set another record in 2019, but due to the disappointing first-half results, net profit is not expected to exceed the 2018 result. However, according to sources, the Taiwanese semiconductor smith’s total annual revenue and profit will increase again in 2020.
At TSMC’s investor meeting on October 17, senior vice president and chief financial officer of TSMC, Wendell Huang, said that the world’s leading chip manufacturer and the world’s leading contract chip manufacturer intends to maintain its CAGR target of 5-10% for sales and net income in the next few years.
Mr. Huang also said that demand for 7nm and 5nm chips has increased significantly in recent months due to good prospects for 5G deployment next year. As a result, TSMC increased its capital expenditures by $4 billion in 2019, of which $2.5 billion will be spent on the development of 5nm standards and $1.5 billion on 7nm. The CEO added that TSMC is investing in new production facilities that meet customer requirements. According to Huang, investments in 2020 will be at approximately 2019 levels.
TSMC CEO Cee Cee Wei (CC Wei) also noted that TSMC’s record investment this year is primarily due to the accelerated rollout of 5G around the world. TSMC raised its 5G smartphone penetration forecast for next year to 15%, although TSMC’s estimated six months ago was below 10%.
Also, the number of silicon chips in 5G smartphones will be significantly higher than in 4G smartphones – this is due to the rapid progress of embedded camera devices, RFICs, modem chips, integrated power management circuits, etc.
Wei pointed out that the commercialization of 5G networks in 2020 will stimulate demand not only for mobile devices but also for high-performance solutions, wearable electronics, the Internet of Things and other areas. Therefore, TSMC is actively expanding its advanced manufacturing capacity to meet the high customer demand next year.
TSMC has already started risky 5nm production with extensive use of deep ultraviolet (N5) lithography, and mass production will begin in the first half of 2020. The first customers will be manufacturers of mobile single-chip systems and HPC. The Taiwanese manufacturer notes that its 5nm standards will be long term, as before 7nm, 16nm, and 28nm.
This year, 7nm production will account for 25% of TSMC’s total revenue, and this figure will rise significantly in 2020. TSMC also plans to start risky production with 6nm EUV standards in the first quarter of 2020 and then start mass printing chips by the end of the year.