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TSMC CEO expects stronger Q1 after Capex boost

Posted: 18 Jan 2016 ?? ?Print Version ?Bookmark and Share

Keywords:TSMC? Samsung? FinFET? foundry? smartphone?

Taiwan Semiconductor Manufacturing Co. (TSMC) has revealed that it will increase its capital expenditure this year to an amount ranging from $9 billion to $10 billion as it targets a bigger share of finer geometry chips. The world's largest foundry is making a big bet after slashing its capex several times last year to a final total of $8.1 billion. The company estimates that its 2016 revenue growth rate may double the company's expected five per cent gain for the overall foundry segment this year.

TSMC said it foresees 'major product advancements' in three areas during the next two years, including high-end smartphones, high-performance computing and emerging applications such as virtual reality, gaming and automotive electronics.

"All of those advances will be supported by TSMC's 10nm and 7nm technologies," stated co-CEO Mark Liu, TSMC. The company expects to complete process and product qualification for 10nm chips and begin customer tapeouts during 1Q16, he said. The company said it is on schedule to start production at the 7nm node in 2017.

TSMC chair Morris Chang

TSMC chair Morris Chang said the company's Q1 this year may be better than the official guidance. Chang (above) is pictured at TSMC's January 14 earnings event. Photo: Alan Patterson/EE Times)

TSMC, which makes silicon for some of the largest companies in the smartphone business such as Apple, Qualcomm and MediaTek, said it expects customers to remain cautious with inventory control following a drop in demand for high-end handsets that started during 2015. The company forecast demand will return to normal in 2Q16. TSMC expects 1Q16 revenue to fall in a range from about $5.9 billion to nearly $201 billion, down almost 10 per cent from almost $6.63 billion it recorded in 1Q15.

Improving outlook

Still, the company's outlook may be brightening.

"I expect Q1 to be stronger than what we are forecasting now," Chang said.

Even so, Chang said it's likely that revenue growth for the overall semiconductor industry will fall in a range of two per cent to three per cent for the next five years.

Smartphones will continue to be a major driver for TSMC's business in 2016, Liu said. TSMC's silicon content in high-end and mid-range smartphones is increasing, contributing to the company's expectation that it will participate broadly in the forecast eight per cent growth this year in the smartphone business, he added.

Beyond 7nm

The company plans to start production of 5nm chips sometime in 2019, about two years after it launches the 7nm node, according to Liu.

After a series of setbacks at 10nm and 7nm, TSMC now appears ready to use extreme ultraviolet (EUV) lithography to make 5nm chips.

"We've made significant progress with EUV to prepare for its insertion, likely in 5nm," according to Liu. "We are installing third-generation EUV tools. Our goal is to double the data-processing throughput for application processors, graphic processors, programmable gate arrays and other processors."

The company said it has achieved output of 500 wafers per day during a one-month period using EUV.

16nm FFC

In 4Q15, TSMC completed the development of 16nm FinFET Compact (16nm FFC), a low-power, low cost version of its 16nm FinFET products that were introduced in the middle of 2015, according to co-CEO C.C. Wei. The company expects 16nm FFC to start production during the current quarter.

TSMC forecast demand for its 16nm products to increase, accounting for about 20 per cent of the company's revenue in 2016, according to Wei. The company predicted that its share of the 16nm/14nm market will increase to 70 per cent in 2016 from 50 per cent in 2015, he said. TSMC's largest competitor in that niche is Samsung.

- Alan Patterson
??EE Times

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