TSMC Slashes 2012 Capex 19% YOY

Taipei, Sept. 21, 2011 (CENS)--Taiwan Semiconductor Manufacturing Co. (TSMC) preliminarily planned to cut capital expenditure for 2012 by 19% from the 2011 level to US$6 billion, which will be mostly spent on boosting 28nm process capacity to keep up with robust demands.

Although the company’s 65nm process capacity is running into oversupply due to weak demands through the fourth quarter, its 28nm process is receiving increasing orders.

Industry executives estimated the company’s 28nm process production lines to run at full capacity in the first quarter of 2012. To keep up with brisk demands, TSMC has begun pilot production at its Fab15 300mm wafer fab, which is located in the Central Taiwan Science Park.

TSMC will begin small-volume production based on 28nm process in the fourth quarter of the year. In light of higher flawless output rate than expected in pilot production, Nvidia Corp., Qualcomm Inc., and Advanced Micro Devices Inc. (AMD) have reportedly increased contracts for the company’s 28nm process capacity in the first quarter of 2012.

Although TSMC’s revenue result for August topped expectations mostly thanks to spiked orders, the company has stressed its business outlook for the fourth quarter remains hazy.

Weak global economy has promoted the company to halve growth forecast of its revenue denominated in the U.S. dollar for this year to 10% from 20% relative to last year. However, the company’s executives estimated inventory backlogs at electronics retailers will drop below normal levels by the end of this year in light of smooth depletions since early this quarter.

TSMC’s Capital Expenditure (2010-2012)

	2010	2011	2012
Spending	US$5.9B.	US$7.4B.	US$6B.
Year-on-year change	122%	25%	-19%
Total output (200mm wafer equivalent)	11.3 million wafers	13.5-13.6 million wafers	16-17 million wafers
28nm roadmap	Small volume production in Q4, ‘11 Commercial production in Q1, ‘12
28nm-based production	Xlinx’s Virtex-7 FPGA chip (in volume production), Altera’s Stratix-V FPGA chip (in volume production), Qualcomm’s Krait ARM chip (volume production planned after Q4, ’11), AMD’s Southern Island graphics chip (volume production planned after Q4 ’11), and Nvidia’s Kepler graphics chip (volume production planned Q4, ’11)