TSMC Downplays Economic Worries, Predicts 30% Sales Increase This Year

What happened now? Many tech companies may be worried about the state of the economy and the looming threat of a recession, but TSMC is certainly not worried. The world’s largest chip maker expects its revenue to grow by about 30% this year, outpacing 24.9% growth in 2021.

Inflation hitting a 40-year high, rising cost of living and Covid restrictions in China affecting manufacturing have contributed to rising prices and slowing consumer spending. This recently led Elon Musk to want to put Tesla on hold and cut “headcount” by 10% due to his “very poor opinion of the economy.”

However, TSMC is unlikely to share Musk’s sentiments. According to Bloomberg, the Taiwanese giant acknowledges that sales of smartphones, TVs and PCs have declined, but said they have risen in other areas such as electric vehicles (ironically). As for inflation, chairman Mark Liu believes that it has little effect on TSMC’s business, and price increases are now slowing down.

“Current inflation does not have a direct impact on the semiconductor industry as the drop in demand is mainly due to consumer devices such as smartphones and PCs, while the demand for electric vehicles is very strong and partially exceeds our supply capacity, so we are adjusting stocks.” Liu said. “Usage rate is full for the remainder of the year.”

In January, TSMC posted a record quarterly profit of just over $6 billion. It also raised its growth forecasts and announced that it will spend $40 billion to $44 billion this year on capacity upgrades, $10 billion more than in 2021 and 43% more than the $25 billion to $28 billion that Intel plans to spend on chip manufacturing in 2022. TSMC will spend another $40 billion next year on its expansion plans.

“TSMC has entered a period of structural high growth,” Liu said. “Technological leadership is key to our growth.”

TSMC made headlines yesterday after a top Chinese economist called on Beijing to seize the chip maker if the US and the West ever imposed sanctions on the country similar to those imposed on Russia.

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