TSMC throws down a $44B gauntlet

During a conference call discussing TSMC’s Q4 2021 results, investment analyst Sebastian Hou at Neuberger Bergman offered an interesting observation: if the world’s leading foundry doubles capital expenditure over three years, revenue and profits double over five years. Even though CFO Wendell Huang warned that “things aren’t that simple,” it makes you wonder what growth trajectory the foundry is on after announcing an estimated capex of 40-44 billion dollars in 2022, up from 30 billion dollars last year and roughly triple the number of 2019.

TSMC’s 2022 capital budget caught analysts off guard; they were counting on a capex of 30-35 billion dollars this year. That would spread the previously announced 100-billion-dollar R&D and capacity expansion investment spanning over three years fairly evenly over the period.