TSMC to raise chip capacity, puts mobile computing in focus

The world's largest semiconductor foundry sees support from Windows 8

TSMC, the world's biggest semiconductor foundry, said on Thursday it expects to expand capacity 20 percent this year as demand for PCs and mobile devices rises.

The company announced capital expenditures of US$7.8 billion in 2011 to support that expansion in manufacturing capacity. Today the company produces 11.3 million eight-inch equivalent wafers among the factories that TSMC owns or manages, CEO Morris Chang told an investor conference.

The firm will also double capital expenditures for research and development to US$700 million, Chang said.

A lion's share of TSMC's semiconductor revenue in the fourth quarter of last year, 47 percent, came from communication equipment such as mobile phone handsets, the company said in a statement. Revenue from computers declined 6 percent in the same quarter. TSMC sales grew by about 42 percent in the full year 2010.

But tablets -- a market led so far by the iPad -- and other PCs are driving TSMC's efforts this year to ramp up capacity and work on advanced production systems, Chang said. TSMC foresees growth in client demand outpacing what it can produce now, he said.

"We stand to benefit from some of these mobile devices," Chang said. "The center of gravity of the computer market is shifting. Maybe we should say it's getting closer to us."

Microsoft's expected use of Windows 8 on ARM-built processors should create particular opportunities for TSMC's mobile computing clients, Chang said.

The company would not say which of its 450 clients was increasing orders for semiconductors.

TSMC's forecast further points to an industry-wide turnaround since 2009, when the global financial crisis chilled much of the tech trade.

Its cross-town rival United Microelectronics said on Wednesday it was unsure how important tablets would be for semiconductors this year. UMC attributed 2010 revenue growth to communication equipment, display drivers and touch pads.

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