Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Taiwan Semiconductor Manufacturing Company has cut its profitability target despite roaring demand for artificial intelligence chips, as the cost burden of diversifying global chip supply chains starts to bite.The world\u2019s largest chip manufacturer said gross margin was expected to drop by a percentage point in the current quarter from 59 per cent in the three months to December 31, due to higher costs at its new fabrication plants, or fabs, in the US and Japan.The contract chipmaker has committed to building three fabs in Arizona, at least two in Kumamoto and one in Dresden, Germany, in response to pressure from customers and foreign governments to rebuild some chip manufacturing capacity in those countries following decades of outsourcing to Asia. More than 90 per cent of the world\u2019s most advanced chips are currently built in TSMC\u2019s fabs in Taiwan.The margin dilution effect would \u201cbecome more pronounced throughout the year as Kumamoto and Arizona ramp up\u201d and would reach 2 to 3 percentage points a year over the next five years, said Wendell Huang, chief financial officer. The margin pressure comes even as TSMC expects continued strong growth in demand for the AI chips it manufactures for Nvidia and other big customers. The company forecast its overall revenue would increase by close to 25 per cent this year and close to 20 per cent annually over the next five years, driven by 45 per cent annual compound growth in AI chip revenue.In a reflection of that bullish outlook, TSMC said it would increase capital spending this year to between $38bn and $40bn, a more than 30 per cent increase after stagnating for three years.When the last semiconductor cycle peaked, TSMC\u2019s gross profit margin hit 62.2 per cent in the final quarter of 2022. But the company suggested that remained an exception. \u201cIf the capacity utilisation rate is very high, it is not impossible for us to reach\u201d a level above 60 per cent, said Huang.CC Wei, chief executive, said TSMC was working on a \u201cnew methodology that will give Arizona some benefit to minimise the cost gap\u201d against fabs in Taiwan. It would include the use of AI to streamline its transfer of new manufacturing processes from Taiwan and find a \u201cmore intelligent ramp-up process\u201d, Wei said.Other efforts to narrow the cost gap include building a more complete supply chain locally. But \u201cwe need the US government\u2019s help for that\u201d, he added.TSMC beat its own guidance and analysts\u2019 expectations with a 57 per cent year-on-year increase in net profit to NT$374.68bn (US$11.4bn) for the December quarter \u2014 the fastest growth in two years \u2014 and a 38.8 per cent increase in revenue to NT$868.46bn.The company said the impact on its operations from Washington\u2019s latest export controls this week, which will restrict the supply of AI chips to all countries but a small group of US allies and partners, would be \u201cminimal\u201d.\u201cWe have communicated with the US government,\u201d said Wei. \u201cWe understand from that communication that what they care about most is AI and that they view automotive, consumer electronics and other applications as normal business.\u201dIt would therefore be \u201ceasier to receive approval\u201d, he added, to ship chips for those other applications.<\/p>\n","protected":false},"excerpt":{"rendered":"
Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Taiwan Semiconductor Manufacturing Company has cut its profitability target despite roaring demand for artificial intelligence chips, as the cost burden of diversifying global chip supply chains<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63],"tags":[],"class_list":{"0":"post-168468","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tech"},"_links":{"self":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/168468","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/comments?post=168468"}],"version-history":[{"count":0,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/168468\/revisions"}],"wp:attachment":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/media?parent=168468"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/categories?post=168468"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/tags?post=168468"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}