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Apple supplier TSMC raises capex at least 10 percent partly on smartphone growth
January 14, 2016 / 10:02 AM / 2 years ago

Apple supplier TSMC raises capex at least 10 percent partly on smartphone growth

TAIPEI (Reuters) - Apple Inc supplier Taiwan Semiconductor Manufacturing Co Ltd (TSMC) on Thursday said it would raise capital expenditure by at least 10 percent from 2015’s four-year low, partly driven by growth in the global smartphone market.

The Taiwan Semiconductor Manufacturing Co Ltd (TSMC) headquarters building is seen in Hsinchu, northern Taiwan, November 19, 2015. REUTERS/Pichi Chuang

The world’s biggest contract chipmaker estimated 2016 capex of $9 billion to $10 billion and said it expects global smartphone shipments to expand 8 percent.

Demand for high-end smartphones has started the year weak, while in other segments there are already signs of upward demand momentum in emerging markets including China, the world’s biggest for smartphones, TSMC said.

“While China’s smartphone market shows signs of recovery, customers remain cautious in general,” said Chief Financial Officer Lora Ho. The capex estimate was “realistic”, she said.

Last year’s total capex of $8.12 billion came as a slump in the global technology sector and slowing economic growth in China forced many technology companies to scale back spending.

TSMC is one of the world’s biggest-spending chipmakers with Samsung Electronics Co Ltd and Intel Corp. It sliced its capex estimate twice last year, but in November said the 2016 amount would be higher.

“Last year was a difficult year,” Chairman Morris Chang said at the chipmaker’s quarterly earnings conference. “2016 I think will be better than 2015. We are mildly optimistic.”

TSMC estimated lower revenue for the current quarter - an off-peak season - compared with three months prior, and said its profit margin would be similar. Revenue for the full year would likely grow 5 percent to 10 percent, versus its industry average forecast of 5 percent.

The estimates came after TSMC reported net profit of T$72.84 billion ($2.18 billion) for the final quarter of 2015, beating the T$68.53 billion average forecast of 23 analysts, according to Thomson Reuters Eikon.

The result was down 3.3 percent from the previous three months and 8.9 percent from the same period a year earlier.

Reporting by J.R. Wu; Editing by Christopher Cushing

Our Standards:The Thomson Reuters Trust Principles.
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