[News] End of an Era under Mark Liu’s Leadership, TSMC Discusses Future Development Plans

---

---

TSMC, the world’s leading foundry, held its shareholders’ meeting on June 4th. This marked the last shareholders’ meeting chaired by TSMC Chairman Mark Liu.

According to a report from Commercial Times, with the conclusion of the era of TSMC’s dual leadership, the baton will be passed to President C.C. Wei to lead TSMC forward. During Liu’s final shareholders’ meeting, Liu further discussed TSMC’s future development plans.

• Discussing Operational Growth: Mark Liu Foresees a Year of Significant Expansion

Liu views the demand for AI optimistically, believing that this year will be one of significant growth for TSMC. He indicates that although last year had a lower base, the ongoing surge in global AI and server deployments continues to drive demand for advanced semiconductors in the market. Consequently, he holds deep confidence in TSMC’s future growth.

Meanwhile, Liu also emphasized that they are accelerating investment and future development, particularly in addressing the insatiable demand for AI computing power. Liu then highlighted their approach to tackling challenges head-on, noting that this ongoing process of learning and overcoming obstacles has fostered high levels of trust from their customers.

Additionally, when asked about the possibility of increasing capital expenditure to meet AI demand leading to a slowdown in dividend growth, Liu responded that TSMC’s growth and capital expenditure for the next five years will be continuously reviewed on a monthly basis.

CFO Wendell Huang elaborated further on whether capital expenditure affects dividend distribution, stating that TSMC plans capacity based on long-term demand and is not influenced by short-term economic fluctuations. After deducting capital expenditure, 70% of free cash flow will be allocated for dividend distribution, thus cash dividends are expected to increase gradually.

Regarding the issue of water and power shortages in Taiwan, Mark Liu mentioned that TSMC’s electricity consumption accounts for 8% of Taiwan’s total electricity usage this year and is expected to reach around 11-12% by 2030.

• Strengthening Fab Intelligence: C.C. Wei Stresses TSMC’s Continued Advantage

TSMC President C.C. Wei remarked that 2023 posed significant challenges for the global semiconductor industry. He noted that while the world economy was recovering from over two years of the pandemic, overall, it remained relatively sluggish. Factors such as persistent high inflation and interest rates also impacted the semiconductor industry’s inventory adjustment cycle.

Still, C.C. Wei highlighted that despite challenges, TSMC’s technological edge propelled the company to outperform the semiconductor manufacturing industry in 2023. This advantageous positions them well to capitalize on future growth opportunities in AI and High-Performance Computing.

Wei also underscored TSMC’s pivotal role as a driving force behind the rise of generative AI-related applications last year. He believes that AI models require more powerful semiconductor hardware support, which necessitates the use of the most advanced semiconductor manufacturing process technology.

Additionally, Wei highlighted TSMC’s achievements in 2023. These achievements include shipping 12 million equivalent wafers of 12-inch diameter, with sales from advanced process technologies (7 nanometers and below) accounting for 58% of total wafer sales, a 5% increase from the previous year. Furthermore, TSMC offers 288 different process technologies, producing nearly 12,000 different products for 528 customers.

• C.C. Wei Asserts TSMC’s Dominance

Amidst competitors’ pursuit, Mark Liu emphasizes TSMC’s serious consideration of every competitor, as there will always be competitors regardless of who they are. Currently, TSMC maintains a technological lead, focusing on whether TSMC’s pace of progress surpasses that of its competitors. TSMC aims to progress faster than others and believes it’s unlikely to be overtaken.

C.C. Wei also mentioned that AI applications are vast and in their early stages. Due to TSMC’s technological leadership, the company is in a highly advantageous position and currently faces no competitors.

On the potential expansion of capital expenditure, Wei states that TSMC will proceed with utmost caution and vigilance. The investment strategy in the upcoming years will remain unchanged, meticulously considering capital expenditure plans and capacity planning based on market demand. Whether it will exceed the previous USD 100 billion over three years remains to be seen.

Regarding the cost of setting up plants in the U.S. and issues related to the U.S. presidential election, Mark Liu stated that although establishing plants in the U.S. is expensive, TSMC manages to keep costs lower than its competitors.

He further noted that the fragmentation of production bases is an global trend, with most Taiwanese companies moving in this direction.

When asked whether customers are demanding the relocation of products or production to the U.S. or other regions, C.C. Wei acknowledged that the instability between China and Taiwan is a concern for the supply chain.

While the issue has been discussed, he emphasized that relocating all production from Taiwan, which accounts for about 80-90% of TSMC’s capacity, is “impossible.” TSMC hopes for no conflict between the two sides, as it would raise concerns far beyond the semiconductor industry.

Read more

• [News] Fueled by AI Demand, TSMC Targets its System-on-Wafer Manufactured with CoWoS to Enter Mass Production in 2027
• [News] Four Semiconductor Applicants for Taiwan’s Chip Act Tax Incentives – TSMC and MediaTek Expected to Benefit

(Photo credit: TSMC)