TSMC maintains sales guidance despite disrupted production caused by quake

Taipei, April 6 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, said Friday night that its sales guidance issued in January remained unchanged, although its production lines in Taiwan were disrupted by the major earthquake that hit the country earlier in the week.

In a statement posted on the Taiwan Stock Exchange (TWSE), where TSMC shares are traded, the company said most of the equipment at its fabs in Taiwan was up and running again as of Friday, after a temporary suspension when the magnitude 7.2 earthquake struck Wednesday morning.

TSMC said it was maintaining its sales revenue guidance for 2024, which it had issued in mid-January, projecting a 21-26 percent annual increase in U.S. dollar terms, above the expected 20 percent growth in the global pure play wafer foundry industry.

Immediately after the earthquake hit Taiwan at 7:58 a.m. Wednesday, TSMC and many other tech giants in the country halted production at their plants and evacuated their employees as a safety measure and to make damage assessments.

The earthquake's intensity, which gauges the actual effect of a seismic event, was highest in Hualien, near the epicenter, where it measured a 6+ on Taiwan's 7-tier intensity scale.

An an intensity level of 5 was reported in the Hsinchu, Longtan and Zhunan science parks, and a Level 4 in the Taichung and Tainan science parks -- all locations where TSMC has operations.

"Based on TSMC's ample experience and capabilities in earthquake response and damage prevention, as well as regular disaster drills to ensure full readiness, overall tool recovery of our fabs reached more than 70 percent within 10 hours of the April 3 earthquake, with new fabs such as the Fab 18 facility [in Tainan] reaching more than 80 percent," the chipmaker said in a statement issued in English on Friday.

"Apart from certain production lines in areas that experienced greater seismic impact, equipment in Taiwan fabs have largely been fully recovered as of April 5, thanks to the collaborative efforts of TSMC colleagues and our supplier partners," the company said.

TSMC said it was conducting a full evaluation of the impact caused by the earthquake, while maintaining close contact with its clients and communicating with them, as appropriate.

In an earlier statement issued on Thursday, TSMC said a small percentage of its equipment had been damaged at certain facilities, partially affecting operations, but there was no damage to critical equipment such as its extreme ultraviolet (EUV) lithography machines, which manufacture its advanced chips.

On Wednesday, American AI chip designer Nvidia Corp., which reportedly is TSMC's second largest client, said that after consultations with its manufacturing partners, it was not expecting any supply disruptions due to the Taiwan earthquake.

Meanwhile, Barclays analysts have projected a loss of sales revenue for TSMC in the second quarter, saying that the production of some of the company's high-end chips require seamless operations around the clock, in a vacuum state, for a few weeks, according to international media reports.

The disruption of TMSC's operations could mean that "some high-end chips in production may be spoiled," the analysts said in a research note.

TSMC has scheduled an investor conference for April 18 to detail its first quarter results.

According to other analysts, investors are waiting for TSMC's reports on its efforts to expand the capacity of the sophisticated Chip on Wafer on Substrate (CoWoS) technology being used at its IC packaging plants.

Industrial sources said TSMC's CoWoS capacity has been fully booked by its clients with Nvidia accounting for more than 50 percent of the orders the chipmaker has received.

On March 18, Vice Premier Cheng Wen-tsan (鄭文燦) announced that TSMC would build two advanced IC packaging plants in Chiayi County, with construction of the first expected to be completed by the end of 2026, and mass production, using the CoWoS technology, scheduled to begin in 2028.

TSMC said the investment project in Chiayi was driven by strong demand for sophisticated IC packaging services for AI applications.