[News] TSMC May Reduce Next Year’s Capital Expenditure, Affecting Orders for Equipment & Testing-Related Companies

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Market speculations rumored that TSMC might cut its capital expenditure for next year to USD 28-30 billion. This potential reduction, ranging from 6.3% to 12.5% compared to this year, is attributed to the shared use of certain process equipment and the utilization of deferred budgets from the current year. If realized, this would mark the lowest capital expenditure point in nearly four years. Additionally, it could impact the order volumes for equipment & testing-related companies, influencing the overall order dynamics in the supply chain for the upcoming year, reported by UDN News.

Responding to the speculations about a decrease in next year’s capital expenditure, TSMC stated on the December 4th that regarding next year’s capital expenditure will be officially disclosed during the January 2024 conference. Despite the potential moderation in capital expenditure, industry observers anticipate continued growth in R&D investment, particularly in advanced process technology.

Industry sources suggest that TSMC’s R&D investment in advanced process technology will persist in its growth trajectory for the next year. Notably, approximately 80% of the equipment for the 3nm advanced process can be shared with the 5nm and 7nm processes. The focus of next year’s capital expenditure is expected to be on investments in the 3nm and below advanced processes and mask technology.

Meanwhile, mature processes will bring a rise in the share of specialty processes and equipment modifications for advanced packaging.

During 2023Q3 earnings call in October, TSMC set a cautious tone, citing uncertainties in the short-term market. The company maintained this year’s capital expenditure at nearly USD 32 billion, adopting a prudent approach to investment.

On the other hand, ASML, the global leader in semiconductor lithography technology, recently released its financial report. The forecast indicates that 2024 will be a transitional year, with expected revenue similar to that of 2023. This cautious outlook aligns with the semiconductor industry’s current phase of experiencing the bottom of the cycle.

(Image: TSMC)