Taiwan Semiconductor Manufacturing Co. (2330), the world’s largest contract maker of chips, will increase capital expenditure this year on higher demand for semiconductors that go into tablet devices and mobile phones.
Demand for 28-nanometer technology is “very much stronger than we expected,” Chairman and Chief Executive Officer Morris Chang said in Tainan, Taiwan today, referring to the company’s most-advanced production process. The higher spending also comes from TSMC’s decision to commence using 20-nanometer technology earlier than previously planned, he said.
Demand for chips that that go into mobile devices is increasing as more people use phones and tablet computers for accessing the Internet and playing games and video. U.S. smartphone users now exceed 100 million, Comscore Inc. (SCOR:US) said last month.
TSMC is currently unable to meet demand for its 28- nanometer technology, Elizabeth Sun, a spokeswoman at the Hsinchu, Taiwan-based company, told Bloomberg News.
Four phases of the company’s Tainan 12-inch plant are in operation now, yielding about $6 billion in annual revenue. The fifth and sixth phases of expansion, to commence volume production in 2014, will yield an additional $6 billion in revenue, cost NT$350 billion ($12 billion) and add 4,500 jobs, Chang said.
TSMC, which also operates an older factory in Tainan using 8-inch wafers, has invested NT$450 billion at the southern Taiwan site to date, Chang said.
One nanometer, equal to one billionth of a meter, measures the size of connections within a chip. A smaller number implies more advanced technology, allowing semiconductors to be smaller and more powerful.
Some of this year’s extra spending will also go toward expanding production of image sensors used in cameras and other specialty products, Chang said.
Shares of TSMC, which manufactures chips used in devices including Apple Inc. iPads and Dell Inc. (DELL:US) computers, fell 1 percent to NT$83 in Taipei trading today. They have gained 9.5 percent this year, outperforming the benchmark Taiex index’s 7.5 percent advance.
TSMC will increase capacity at its Taichung, Taiwan facility 50 percent to 75,000 wafers a month by May next year, J.K. Wang, a vice president said today.
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