By Aries Poon
TAIPEI-- Taiwan Semiconductor Manufacturing Co. posted a record
fourth-quarter profit and said it plans to spend more than ever on
new technology, as the maker of chips for Apple Inc.'s iPhones
fights to regain market share.
TSMC, the world's largest contract chip maker by revenue, said
Thursday it plans to boost capital expenditures to US$11.5 billion
to US$12 billion this year from US$9.52 billion in 2014. The funds
will largely be used to speed up its migration to more advanced
chip-making technology as the company faces increased competition
from rivals such as Samsung Electronics Co. and Intel Corp.
The announcement came after TSMC reported fourth-quarter net
profit rose 79% from a year earlier to 79.99 billion New Taiwan
dollars (US$2.51 billion), a new quarterly record. Full-year
earnings also hit a record, rising 40% to NT$263.9 billion.
TSMC's earnings benefited from a contract it won with Apple last
year, when it beat out Samsung to supply the U.S. company with
microprocessors for iPhones and iPads. However, TSMC Chief
Financial Officer Lora Ho said the sharp annual jump was partly due
to a weaker New Taiwan dollar against the U.S. dollar.
Mark Liu, one of TSMC's co-chief executives, said that revenue
this year will likely rise by "several percentage points" more than
the estimated industry average increase of 12%. For the quarter
ending March 31, TSMC expects to rake in NT$221 billion to NT$224
billion revenue, similar to the fourth quarter of 2014 but still
around 50% higher than the first quarter in 2014.
The global rollout of fourth-generation mobile networks has
created fresh demand for smartphones and their components in both
developed and emerging markets. But TSMC expects to lose some of
its orders to Samsung this year, Chairman Morris Chang said.
Samsung is set to launch 14-nanometer chip technology soon and
Intel is already producing with the 14-nanometer process. TSMC
expects to adopt a slightly less-advanced 16-nanometer process
later than its rivals, probably in the fourth quarter this year. A
chip's transistor components and the spaces between them are
measured in nanometers--a billionth of a meter. The smaller the
space between components, the more powerful the chip.
Credit Suisse wrote in a research report dated Jan. 8 that two
of TSMC's major customers--Apple and Qualcomm Inc.--are
diversifying their chip sources to other suppliers, such as Samsung
and GlobalFoundries, which are catching up on technology.
Intense competition and maturing markets are also set to slow
global growth of smartphone sales this year, an unfavorable
backdrop for chip makers in general. Data provider International
Data Corp. predicts global smartphone sales in 2015 to rise 12% to
1.4 billion units, less than a 26% growth in 2014.
Write to Aries Poon at aries.poon@wsj.com
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