TSMC cuts capex on inflation worries after posting 80% profit jump

Taiwanese chipmaker TSMC cut its annual investment budget by at least 10% for 2022 and struck a more cautious note than usual on upcoming demand, flagging challenges from rising inflationary costs and predicting a chip downturn next year.

Speaking on the latest set of U.S. export controls aimed at slowing China’s progress in advanced chip manufacturing, TSMC CEO C.C. Wei said on Thursday that it had obtained a one-year authorisation that covered its factory in Nanjing, China.

The new rules require companies looking to supply Chinese chipmakers with advanced gear to obtain a licence from the U.S. Department of Commerce, though Washington is expected to spare some foreign companies operating in China.

“Based on our initial reading and feedback from customers the new regulations sets the control threshold at a very high-end specification, primarily used for AI or supercomputing applications. Therefore our initial assessment is the impact to TSMC is limited and manageable,” Wei said.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chipmaker, makes most of its chips in Taiwan.

After posting an 80% surge in third-quarter profit, the strongest growth in two years, TSMC said it was being more conservative in planning investments for 2023.

“We expect probably in 2023 the semiconductor industry will likely decline, but TSMC also is not immune,” Wei told a media call. Reuters