TSMC’s gross margin target unchanged
The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates.
One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation.
The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged.
The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh) for household and industrial users to stem massive losses for the state-owned Taiwan Power Co (台電).
For industrial users, the increases range from 7 percent to 25 percent depending on how much electricity certain industries use.
The average rise in industrial rates is 12.7 percent, pushing the average price from NT$3.38 per kWh up to about NT$3.81 per kWh, the ministry said.
TSMC is said to belong to the ultra-high voltage power user group which would see electricity bills rising 25 percent due to their consumption of more than 500 gigawatt-hours per year.
The electricity rate hike is expected to add about NT$4 billion (US$125.2 million) to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154, local media forecasts showed.
The chipmaker recorded a gross margin of 53 percent in the fourth quarter of last year, close to the higher end of its forecast of 51.5 to 53.5 percent, but down 1.3 percentage points from a quarter earlier because its 3-nanometer chips had not yet reached economies of scale.
The 3-nanometer process is the latest technology of which TSMC began commercial production at the end of 2022.
TSMC said it has five energy conservation task forces in place to facilitate power savings across its operations such as advanced process research and development, 12-inch and 8-inch wafer production, back-end packaging and testing services, and extreme ultraviolet (EUV) lithography equipment, which is used to produce high-end chips.
TSMC implemented massive power conservation measures in 2022 to cut power usage by 700 gigawatt-hours a year, which was equivalent to a reduction of about 360,000 tonnes in carbon dioxide emissions.
Among these measures, TSMC has optimized 12-inch wafer production equipment, which has helped the company cut electricity consumption by about 112 gigawatt-hours a year.
In addition, it has worked with its EUV supplier to cut power consumption by 22 percent from the production of each wafer made by EUV machines.
TSMC said the company is determined to fulfill its social responsibility.
The company’s operations in Taiwan account for more than 90 percent of its total revenue.