TSMC's investor conference could focus on U.S. call for information

10/09/2021 02:43 PM
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CNA file photo
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Taipei, Oct. 9 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC) has scheduled an investor conference for next Thursday Oct. 14, and the closely watched event by investors around the world is expected to touch on the U.S. request for chipmakers to share information on demand and delivery, according to analysts.

The other major topics include its third quarter results, fourth quarter outlook, capital expenditure and advanced manufacturing processes, analysts said.

On Sept. 23, the U.S. government held a meeting with TSMC, Samsung Electronics Co., Intel Corp. and others on the progress the industry is making to address issues in the semiconductor supply chain, and launched a "Request for Information" (RFI) on the subject the same day.

The RFI asks companies in the semiconductor supply chain to "voluntarily share information about inventories, demand, and delivery dynamics." Its goal is to "understand and quantify where bottlenecks may exist," according to a statement published on the U.S. Commerce Department's website.

The request has triggered fears over confidential business information leaks which could cause economic losses to Taiwanese semiconductor suppliers.

Taiwan's Economics Minister Wang Mei-hua (王美花) said on Friday that she has conveyed the concerns raised by Taiwanese semiconductor suppliers in a regular meeting held on Wednesday with Sandra Oudkirk, director of the American Institute in Taiwan, the de facto U.S. embassy in Taiwan.

While Wang said companies that received the questionnaires are allowed to answer the questions "voluntarily," emphasizing they do not have to share confidential business information, the market remained uneasy about the U.S. request.

Earlier this week, Sylvia Fang (方淑華), TSMC's legal and general counsel, said her company will not disclose any sensitive information, in particular information involving its clients.

On Friday, TSMC reported that its consolidated sales for the third quarter of the year rose 11.42 percent from the previous quarter to NT$414.67 billion (US$14.81 billion) after a strong showing in September, when the chipmaker's monthly revenue topped NT$150 billion for the first time to hit NT$152.69 billion.

In September, Apple unveiled the newest iPhone 13 lineup, which use the A15 processor made on TSMC's advanced 5 nanometer technology. TSMC is believed to be the sole supplier of the A15 processor.

While the third quarter sales came within TSMC's forecast, analysts said the market has been watching closely how the company will report its gross margin -- the difference between revenue and cost of goods sold -- for the third quarter.

In the second quarter, TSMC's gross margin fell 2.4 percentage points from the first quarter to 50 percent due to the higher depreciation costs on its 5nm process, the latest technology for which the chipmaker has launched mass production.

Looking ahead, analysts said, TSMC could give guidance, forecasting its revenue for the fourth quarter will rise about 5 percent from a quarter earlier to hit another new high, but the 5 percent growth forecast appeared cautious as shipment momentum of TVs and Chromebooks has slowed.

Due to a global chip supply shortage, TSMC informed its clients of a price hike in August, marking the first time in years for the chipmaker to raise prices for its entire product line. Analysts said further price hikes could be part of the focus in the investor conference as higher product prices are expected to dictate TSMC's sales, profit and gross margin in 2022.

After the 5nm process, TSMC is developing the 3nm process which it plans to begin mass producing in 2022. Beyond the 3nm process, analysts said, the market is looking at an exact timetable to be disclosed by TSMC for 2nm process development as rival Samsung Electronics Co. has announced it will begin commercial production of its 2nm process in 2025.

TSMC is investing US$12 billion to build a 5nm wafer fab in Arizona, and is evaluating the possibility of setting up production sites in Japan and Germany.

Analysts said the upcoming investor conference is expected to detail the chipmaker's global expansion plan and a possible move for TSMC to raise its capital expenditure over the next three years from the current US$100 billion spending plan.

This week, TSMC shares moved between NT$560.00 and NT$583.00 and closed at NT$575.00 on Friday, down 0.86 percent from Thursday. During the five sessions, foreign institutional investors stood on the sell side, registering a net sell of 30.36 million shares.

(By Chang Chien-chung and Frances Huang)


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