TAIPEI, Taiwan — On Thursday, Taiwan Semiconductor Manufacturing Co. revealed that it is in talks to develop its first chip manufacturing facility in Japan. The world’s largest chipmaker said it is performing due diligence on the project, which involves the construction of a wafer fabrication factory in western Japan. The news comes as TSMC reported an almost 20% year-on-year increase in net profit for the April-June quarter, only missing analysts’ expectations for the world’s largest contract chipmaker. The company’s net profit increased 19.8% year over year to 134.36 billion New Taiwan dollars ($4.81 billion), while revenue increased nearly 20% to NT$372.146 billion. Gross margin for the quarter was 50%, somewhat lower than the average projection of 51.1 percent, but higher than the previous year’s figure of 53%. The earnings boost comes amid an extraordinary worldwide chip scarcity that is putting pressure on everyone from carmakers to electronics manufacturers, prompting TSMC to invest extensively in boosting its production capacity. In April, the business announced plans to invest $2.8 billion in expanding its chip operations in Nanjing, China, and in June, it broke ground on a $12 billion advanced semiconductor project in Arizona. TSMC has also committed to spending $100 billion on capacity expansion through 2023. The Taiwanese chip behemoth is likewise undergoing a fundamental shift in its long-standing strategy of concentrating production in Taiwan. In addition to considering the construction of its first chip plant in Japan, the business has stated that it will continue to increase chip production in the United States. The centralization of advanced chip production in Taiwan, according to a recent supply chain study by Washington, is a risk in the semiconductor supply chain. Some analysts are concerned that TSMC’s profitability would suffer as a result of its high capital spending now and in the coming years, while others remain enthusiastic about the company’s prospects. “Margin pressure, we believe, has increasingly become a major problem… Despite its high quality, we do not find the stock appealing “Morgan Stanley analyst Charlie Chan noted in a research report. Investing in TSMC stock could be “dead money” in the next 12-18 months, he added. TSMC is likely to maintain its manufacturing supremacy over the next several years, according to Mark Li of Bernstein Research. “We believe TSMC’s prospects are still bright in the medium to long term. Despite the risk of a sector-wide correction next year, we believe TSMC is unique and will be unaffected “According to the analyst. “TSMC’s relationship with Intel is progressing well, and it will contribute significantly to the company’s revenue growth in 2023.” Several other institutional investors, including Citi, Credit Suisse, and HSBC Bank, had reasonably favorable views ahead of earnings, but all were concerned that the market may correct at some time. On Thursday, TSMC’s stock closed 0.16 percent higher at NT$614 in Taipei. The stock of the chipmaker has risen by more than 15% so far this year./n
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