TSMC Cuts Back CAPEX Budget Despite Record Profits

[TheLostSwede]

Another quarter, another record breaking earnings report by TSMC, but it seems like the company has released that things are set to slow down sooner than initially expected and the company is hitting the brakes on some of its expansion projects. The company saw a 79.7 percent increase in profits compared to last year, with a profit of US$8.8 billion and a revenue of somewhere between US$19.9 to US$ 20.7 billion for the third quarter, which is a 47.9 percent bump compared to last year. TSMC's 5 nm nodes were the source for 28 percent of the revenues, followed by 26 percent for 7 nm nodes, 12 percent for 16 nm and 10 percent for 28 nm, with remaining nodes at 40 nm and larger making up for the remainder of the revenue. By platform, smartphone chips made up 41 percent, followed by High Performance Computing at 39 percent, IoT at 10 percent and automotive at five percent.

TSMC said it will cut back its CAPEX budget by around US$4 billion, to US$36 billion, compared to the earlier stated US$40 billion budget the company had set aside for expanding its fabs. Part of the reason for this is that TSMC is already seeing weaker demand for products manufactured using its N7 and N6 nodes, as the N7 node was meant to be a key part of the new fab in Kaohsiung in southern Taiwan. TSMC is expecting to start production on its first N3 node later this quarter and is expecting the capacity to be fully utilised for all of 2023. Supply is said to be exceeding demand, which TSMC said is partially to blame on tooling delivery issues. TSMC is expecting next year's revenue for its N3 node to be higher than its N5 node in 2020, although the revenue is said to be in the single digit percentage range. The N3E node is said to start production sometime in the second half of next year, or about a quarter earlier than expected. The N2 node isn't due to start production until 2025, but TSMC is already having very high customer engagement, so it doesn't look like TSMC is likely to suffer from a lack of business in the foreseeable future, as long as the company keeps delivering new nodes as planned.




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[medi01]

So, higher revenue AND higher income.

Guess who's gonna pay for that...

 

[AsRock]

So, higher revenue AND higher income.

Guess who's gonna pay for that...

Just what nVidia needed huh, all so AMD but not as much.

 

[thewan]

Demand is said to be exceeding demand

Much demand indeed. now if only TPU increase its capex(???) budget for its proofreaders.

 

[R0H1T]

Welcome to the new world ~ the same old, same old

 

[P4-630]

capex(???)

Capital Expenditure Budget

 

[R0H1T]

Slightly surprising that 5nm has already exceeded 7nm revenues, looks like Apple's moving fast to smaller nodes despite some weak demand ~

Apple Ditches iPhone Production Increase After Demand Falters

Apple Inc. is backing off plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize, according to people familiar with the matter.

www.bloomberg.com

 

[ARF]

Capital Expenditure Budget

True, but there is indeed no need to use the professional term - simply say - the investment in new production capacity and assets.

 

[RandallFlagg]

Slightly surprising that 5nm has already exceeded 7nm revenues, looks like Apple's moving fast to smaller nodes despite some weak demand ~

Apple Ditches iPhone Production Increase After Demand Falters

Apple Inc. is backing off plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize, according to people familiar with the matter.

www.bloomberg.com

Moving fast? This is the 3rd gen they've been on N5 for the majority of their phones.

Only the iPhone Pro / Apple A16 is on N4 and that is still a "5nm" node "marketed" as "4nm". It's 6% more dense than N5, not a notable difference at all, most nodes have variations (low power, high power etc.) that can be +/- 15%

They've never taken this long to go to a new node with the iPhone.

 

[ARF]

They've never taken this long to go to a new node with the iPhone.

Get used to this trend - even worse will come. Expect N3 process to last 10 years lol and to be the last manufacturing process before a physics law strikes and no more optical shrinks are possible at all.

 

[konga]

TSMC to its clients for the umpteenth time: Sorry fellas, we have no choice but to raise prices. There's no other way!
TSMC to its investors: We are pleased to announce yet another quarter of record-breaking profits!

Hmm. I'm starting to suspect that these semiconductor companies aren't operating honestly...

 

[dicobalt]

Good, maybe this means they will slow down on the low volume high price business model.

 

[Daven]

TSMC revenue is now higher than Intel for the first time. I always said that Intel should become FAB only and spin off the chip business. The money is in the fabbing not selling the chips directly. How many potential customers refuse to use Intel fabs because of fears that they would steal IP for their chip business?

Cut the cord Intel and become fab only. You can make so much more money and help satisfy global chip demand in the process.

Oh and the spun off chip business can use the ARM model and license X86 and other IP.

 

[Wirko]

Get used to this trend - even worse will come. Expect N3 process to last 10 years lol and to be the last manufacturing process before a physics law strikes and no more optical shrinks are possible at all.

Agreed - but is's always the effect of laws of physics laws and laws of economics working together, a combination of "it's impossible to make" and "it's not worth it unless Apple can sell 100 billion iPhones 17".

Good, maybe this means they will slow down on the low volume high price business model.

We're talking about TSMC here ... what do you mean by low volume?

 

[dicobalt]

Agreed - but is's always the effect of laws of physics laws and laws of economics working together, a combination of "it's impossible to make" and "it's not worth it unless Apple can sell 100 billion iPhones 17".


We're talking about TSMC here ... what do you mean by low volume?

High end parts become $250 instead of $600-700. Like the 2500K which was only $216 on launch.

 

[konga]

High end parts become $250 instead of $600-700. Like the 2500K which was only $216 on launch.

And the 2600K was $317. Flash forward to today, and the 13600K will be $330. So... I'm not following your point, here.

Intel's chips have only gotten slightly more expensive over the years, not counting for inflation.

 

[dicobalt]

And the 2600K was $317. Flash forward to today, and the 13600K will be $330. So... I'm not following your point, here.

Intel's chips have only gotten slightly more expensive over the years, not counting for inflation.

6 core CPUs are mainstream these days, have a look at the Steam Hardware Survey data below. As far as the 13600 the p-cores matter for gaming, the e-cores are much slower and out of sync with the p-cores. It's probably a nightmare to reconcile e-cores well in a game engine. The 13700 line would be Intel's start of the high end at $430 with 8 p-cores. I know there has been inflation but a 100% price increase over 12 years is not reality. It's TSMC stroking the low number machine and getting low volume in return which then causes high prices. The perfect scenario to enable customer price fixing. We will see as the years roll on how many of their customers decided to take advantage of that opportunity.

 

[Fourstaff]

TSMC to its clients for the umpteenth time: Sorry fellas, we have no choice but to raise prices. There's no other way!
TSMC to its investors: We are pleased to announce yet another quarter of record-breaking profits!

Hmm. I'm starting to suspect that these semiconductor companies aren't operating honestly...

TSMC is currently the most advanced foundry right now (for certain chip lines at least), they can charge whatever they wish. We as consumers can choose to vote with our wallet.

 

[Chaitanya]

Quite understandable given slowdowns in all the major economies especially with Europe(who went woke with sanctions) upcoming winter is going to be a bad one.

 

[mechtech]

A few years ago that would have been a yearly profit…now it’s quarterly!!!!!

Pretty obscene amount of cash. I wonder what capex is getting cut back?? The plant being built in the states?

 

[evernessince]

Get used to this trend - even worse will come. Expect N3 process to last 10 years lol and to be the last manufacturing process before a physics law strikes and no more optical shrinks are possible at all.

TSMC has 2nm on their roadmap for 2026. N3 will be around for 10 years yes but it won't be the leading node as you imply for 10 years. It'll be the leading node for a tad under 3 years, the same as 5nm.

In addition, this move is in response to a global recession and massive drop in worldwide chip demand. Not due to a slowdown in node processes advancement. This was a long time coming, people purchased a ton of chips during the pandemic and now the pendulum has swung the other way.

 

[Awwwyeahhhbaby]

They need these profits to weather the coming recession and build new R&D, they ain't in a cheap industry.

 

[evernessince]

TSMC is currently the most advanced foundry right now (for certain chip lines at least), they can charge whatever they wish. We as consumers can choose to vote with our wallet.

Consumers only have limited sway on modern chip pricing. Critical infrastructure and industries like healthcare rely on chips to function. You need servers to provide a bevy of online services as well, all of which has crept deeper into our everyday lives.

This isn't a matter customers should be tackling alone, governments should keep a close eye on chip manufacturing and prices as it is now of the upmost import to national security and the economy. Companies should absolutely not be able to charge whatever they want for what is increasingly becoming a necessity to operate in the modern world.

 

[R0H1T]

Consumers only have limited sway on modern chip pricing. Critical infrastructure and industries like healthcare rely on chips to function. You need servers to provide a bevy of online services as well, all of which has crept deeper into our everyday lives.

This isn't a matter customers should be tackling alone, governments should keep a close eye on chip manufacturing and prices as it is now of the upmost import to national security and the economy. Companies should absolutely not be able to charge whatever they want for what is increasingly becoming a necessity to operate in the modern world.

But you see that's socialism (price caps & what not) & if you look at the general sentiment over here most users will not support it! So in essence "Capitalism" prevails & we get what we paid for

 

[evernessince]

But you see that's socialism (price caps & what not) & if you look at the general sentiment over here most users will not support it! So in essence "Capitalism" prevails & we get what we paid for

Oh I wouldn't doubt it. When not buoyed with guardrails, capitalism is a self consuming system. Either you assume that at some point the mentality changes or the system collapses.