Chip giant TSMC, flush with record sales, plans $16bn fab build-out
The race to 10-nanometer process is on
Taiwan Semiconductor Manufacturing Company (TSMC) reported sales for January 2015 that were the highest of any single month in its history, amid rising demand for silicon for graphics and mobile computing.
TSMC said [PDF] on Tuesday that its net revenues for January hit $2.76bn in US dollars – a company record and a whopping 69.4 per cent increase over January 2014.
The news follows a similarly record-breaking earnings report for the fourth quarter of the chipmaker's fiscal 2014. In January, TSMC said its revenues for the three months ending on December 31 were up 52.6 per cent over the fourth quarter of 2013, reaching $7.04bn US dollars for the first time.
The world's largest contract chipmaker, TSMC bakes silicon for the likes of AMD, Apple, Nvidia, Qualcomm, and others.
The firm showed impressive growth throughout its fiscal 2014, but its sales really started taking off in the second half of the year. Its revenues for each of the last six months of 2014 beat those of the previous year's month by 25 per cent or more.
During TSMC's fourth quarter earnings call, CFO Lora Ho attributed much of its fourth quarter gains to strong growth in demand for chips based on its 20-nanometer process. The tech accounted for 21 per cent of TSMC's revenues in the fourth quarter, even though the chipmaker only began volume shipments of 20nm silicon in Q2.
On Tuesday, JP Morgan analysts led by Gokul Hariharan said the continued growth in TSMC's 20nm business was likely due to stronger-than-expected wafer shipments to Apple – even though some of Cupertino's newest chips are reportedly being fabbed by Samsung using its 14nm process.
"With iPhone 6/6S wafer demand momentum expected to taper off post January, we believe this implies that further Apple products could be using 20nm process (larger iPad, 4-inch iPhone refresh)," the analysts said.
They added that strong demand from FPGA vendors, Mediatek, Nvidia, Qualcomm, and others could mean TSMC will outperform Wall Street's first quarter revenue estimates.
TSMC, meanwhile, says it plans to put its recent windfalls to good use. Last week, it said it would invest approximately $16bn US dollars toward building new factories in the Central Taiwan Science Park, according to a report by Bloomberg.
It's believed that one goal of these new facilities will be to quickly ramp up a new process based on 16nm FinFET, a 3D silicon technology that's already being used by some of TSMC's competitors, including GlobalFoundries, Intel, and Samsung. It's been rumored that TSMC plans to begin volume shipments of 16nm wafers by the end of 2015.
TSMC's real hope, however, is that it will be able to leapfrog Samsung and deliver chippery based on a 10nm process by 2016.
"16nm is the first step. But 10nm will be the improvement, and it'll be in production next year," Lluis Paris, technical director of TSMC's IP portfolio, told The Register in October – somewhat optimistically, we suspect – at ARM TechCon in Santa Clara, California.
"It'll be 10nm all the way, including full metallization," Paris said. ®
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