TSMC’s first legal meeting in 2021 will shock the world. President Wei Zhejia announced that this year’s capital expenditure will be between US$25 billion and US$28 billion, an increase of 45% to 62% over last year, and much higher than the 21 billion originally expected by foreign investment. Around the dollar.

The shocked legal people kept asking questions about capital expenditures, "Is it because of Intel's outsourcing?" "Is it from the kinetic energy of smartphones or HPC (High-Performance Computing)?" "Does this include the cost of building factories in the United States?"

Today, "TSMC is entering another high-growth range." Wei Zhejia is confident, emphasizing that 5G and high-performance computing (HPC) have made TSMC's advanced process demand strong, and HPC will bring increasingly important and long-term growth to TSMC. The driving force of TSMC is the biggest contributor to strong revenue growth. It is estimated that from this year to 2025, TSMC’s annual compound growth rate will reach 10-15%.

Moreover, 80% of the US$20 billion will be used for advanced manufacturing processes such as 3nm, 5nm and 7nm.

"Heaved a sigh of relief," a foreign analyst said after the Fasuo meeting.

Because he vowed in a recent research report that TSMC will take over Intel’s large processor order in two years’ time and significantly increase TSMC’s target price.

But on the 14th, Intel suddenly announced that it had appointed VMware CEO Pat Gelsinger (Pat Gelsinger) as the new CEO, replacing the current CEO Bob Swan, who strongly supports manufacturing outsourcing. As a result, Intel's stock price rose more than 10%.

The analyst was shocked when he saw the news: "Launch a coup! It's over!" He and some industry players were worried for the first time. It may be that Intel's internal conservative forces combined with the board of directors to counterattack, hoping not to outsource the processor to TSMC. Intel's dignity.

But more than ten hours later, after TSMC announced capital expenditures that far exceeded the industry's expectations, he was relieved.

Because, if Intel’s order to TSMC is really variable because of the “coup d'etat”, “TSMC must have been very nervous last night, and it should be slowed down. It will not be announced now (the news of large-scale factory expansion).” He judged.

However, TSMC has never let go of Intel's orders.

For example, when Zhan Jiahong of Morgan Stanley Securities asked whether the doubling of capital expenditures this year was caused by outsourcing orders for Intel CPUs?

Wei Zhejia responded that we do not comment on specific customers and specific regions, "but capital expenditures are based on the long-term needs of 5G and HPC, and the general trend reflected by this demand."

An analyst explained that HPC in Wei Zhe's family actually refers to Intel orders. Anyway, in the field of high-performance computing, the most important product-cloud server, more than 90% use Intel's most advanced processors.

Repeating glory, starting from this year to 2025, the annual compound growth rate of revenue is 10%~15%

TSMC also mentioned history twice at the conference: TSMC's capital expenditure also increased sharply in 2010, and brought a compound annual growth rate of 15% from 2010 to 2015, thereby laying the foundation for the prosperity of TSMC for many years.

This is the most legendary page of "The Myth of Zhang Zhongmou".

He was optimistic about the future demand for smartphones as soon as he returned to the post of chief executive officer. Under the opposition of independent directors, he surpassed all opinions and doubled the capital expenditure in 2010 in one fell swoop, and finally allowed TSMC to get rid of its rivals and dominate. Foundry industry.

"This increase means that TSMC is very optimistic." Last year, Hou Mingxiao, head of research at CLSA’s Asian technology industry department, who first called out TSMC’s share price of 500 yuan, also expressed "surprise". He said that if there is no customer commitment and Clear cooperation, TSMC will not make such a decision.

Hou Mingxiao said that when Zhang Zhongmou drastically expanded capital expenditures in 2010, technology was not the first. It was a vision full of uncertainty. But now, "TSMC has been in a leading position in the world and has higher visibility. Now the competitive situation is clear. Everyone is behind him. So he should have the data to make the principals have the confidence to do so, and the probability of success corresponds to that. high!"

Bernstein's research report predicts that in 2023, Intel will outsource 10% to 30% of the CPU, bringing 5% to 10% revenue growth for TSMC.

Where is the next wave? HPC's big growth, auto market ignition

Moreover, Intel orders are not the only support behind TSMC’s amazing capital expenditure growth.

"We see strong business opportunities in the four growth platforms of high-performance computing, automotive electronics, Internet of Things and smart phones," Wei Zhejia said.

TSMC’s Chief Financial Officer Huang Renzhao explained that the fourth quarter’s revenue mainly benefited from the launch of 5G smartphones and HPC-related applications, which brought strong demand for TSMC’s 5nm process. In the fourth quarter of last year, consolidated revenue was 361.53 billion yuan, an annual increase of 14%, gross profit margin was 54%, after-tax net profit was approximately 142.77 billion yuan, and net profit per share was 5.51 yuan.

From a long-term perspective, Wei Zhejia pointed out that HPC is the biggest factor in TSMC’s continued upward performance. Customers from various applications are trying to obtain the best computing performance with different architectures. Based on TSMC's leading technology, it can be in the best position to grasp the industry trend, 2020 to 2025 will have a compound annual growth rate of 10% to 15%.

The automotive sector is also igniting: Although the automotive market was relatively weak in 2018 and was even more affected by the new crown epidemic last year, which caused TSMC customers to reduce demand in the third quarter of last year, Wei Zhejia said that TSMC began to see signs of industry recovery in the fourth quarter of last year.

He said that due to the rebound in demand in the automotive supply chain, the tight capacity supply will become more obvious. "TSMC will make it a top priority and continue to work closely with our automotive electronics customers to support capacity demand."

In addition, mobile phones are also steadily adding warmth: this year, the number of global smartphones is expected to grow by 10% compared with last year, and the market share of 5G smartphones will increase from 18% last year to more than 35% this year. The silicon content of 5G smartphones is also Will increase compared with 4G smart phones.

Foreign investment: everyone is his, TSMC has the final say!

Wei Zhejia expects that the semiconductor (excluding memory) market will grow by about 8% in 2021, and the wafer manufacturing industry will grow by about 10%. In dollar terms, TSMC is confident that it will increase its mid-teens percentage, which is better than the overall market performance.

Technically, TSMC 3nm plans to start trial production in 2021, and mass production is expected in the second half of 2022. "We are confident that TSMC 3nm technology will become another important and lasting technology," Wei Zhejia said.

Bernstein analyst Mark (Mark Li) believes that only TSMC currently has the advanced process needed in this world. If Intel still entrusts the important 3nm to TSMC, 3nm will become TSMC’s most powerful process. The company's position is very important.

"Basically it is now, TSMC said it!" Hou Mingxiao made this comment, "He said everything is counted, because everyone is his customer."