TSMC capital expenditure in 2020 exceeds $18 billion

TSMC is the world’s largest and most advanced mobile chipmaker and the Taiwanese company is doing quite well. According to a recent report, TSMC’s revenue hit a new high last year – reaching $45 billion. However, the company’s expenditure on advanced process technology production and process research and development has also increased. A recent report from TSMC shows that its expenditure in 2020 hit NT$507.24 billion ($18.174 billion). This is a 10.2% increase from its expenditure of 2019.

In the financial report for the fourth quarter of 2019 released on January 16 last year, TSMC’s management predicted that its 2020 capital expenditures would be between $15 billion and $16 billion. However, they made adjustments in the financial report for the second quarter of last year. It was raised to $16 billion to US$17 billion, and the final $18.174 billion still exceeded the adjusted upper limit.

However, as TSMC expands its 5nm process capacity, installs equipment for the 3nm process chip factory, and advances the research and development of advanced processes, TSMC’s capital expenditure this year will be even higher. They expect capital expenditures of $25 billion to $28 billion this year, which is much higher. 

TSMC will manufacture 3nm chips for Intel in the second half of 2022

Reports out of Taiwan claim that Intel signed an outsourcing contract with TSMC last year and will manufacture chips for CPUs using 3nm technology in the second half of 2022. According to reports, Intel will become TSMC’s second-largest customer on 3-nanometer chips, second only to Apple. According to Bloomberg’s previous report, Intel is negotiating with TSMC and Samsung to discuss the possibility of outsourcing some high-end chips to two manufacturers. Intel’s negotiations with Samsung are said to be in a more preliminary stage.

According to a Bloomberg report, Intel has not made a final decision on outsourcing. The chips or other components that Intel will purchase from TSMC will not enter the market until 2023. These chips will also be based on existing manufacturing processes used by other TSMC customers.

Bloomberg News further claims that TSMC is preparing to provide Intel with chip manufacturing capabilities based on the 4-nanometer process. It will do the preliminary tests with the 5-nanometer process. However, Intel is also in negotiations with Samsung, but these discussions are in a more preliminary stage.

Although it is one of the world’s well-known chip manufacturers, Intel has suffered years of delays. The American manufacturer is now lagging behind its competitors in the industry. Some of these competitors design their own chips but outsource manufacturing to TSMC.

In addition to investor concerns about Intel’s stagnation, Daniel Loeb, chief executive of hedge fund Third Point, urged the chip maker to take strategic action in the face of its decline in December.

As early as 2018, Intel outsourced part of the 14-nanometer chip production to TSMC because of high demand and manufacturing problems. Thus, this will not be the first time that Intel will be outsourcing production to TSMC.