TSMC Tops Taiwan As Highest R&D Spender Among Locally Listed Manufacturers 2023


This is not investment advice. The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.

Fresh data from the Taiwan Ministry of Economic Affairs (MOEA) shows that semiconductor fabrication remained the heaviest research and development spender in the country in 2023. Taiwanese chip manufacturing behemoth TSMC, the world’s largest leading contract chip manufacturer, was unsurprisingly also one of Taiwan’s largest R&D spenders after forking NT$178 billion specifically on developing advanced products and maintaining its lead in the global race to make the smallest and fastest chips.

Along with US chip giant Intel and Korean conglomerate Samsung’s chip manufacturing division, TSMC can produce and market chips under the N3 or 3-nanometer branding. This places its products at the top of the global semiconductor industry and also leads to TSMC’s research costs being more than double that of Taiwan’s second-largest R&D spender, MediaTek.

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The key standout of the government’s latest set of economic data about spending in Taiwan is the scale of TSMC’s investments. The firm’s NT$176 billion in research and development spending accounted for a quarter of all such spending by manufacturing firms listed on local Taiwan stock markets. Similarly, TSMC’s fixed asset investment, which covers spending for equipment, factories and other assets, came out as NT$635 billion, more than half of the $1.1 trillion total investment outflows from the listed Taiwanese manufacturers.

However, while TSMC’s fixed asset investment dropped annually in 2023 due to consistent macroeconomic uncertainty and a new era of high rates, TSMC, MediaTek and other firms grew their annual R&D spending last year. Additionally, while TSMC, who led fixed spending by posting NT$635 billion of fixed investments, saw these drop by 29% annually, its smaller rivals accelerated their outlays.

After TSMC, Taiwan’s second and third largest listed manufacturers were United Microelectronics Corporation and Powerchip Semiconductor. The two firms cumulatively accounted for NT127.2 billion in fixed asset investments and grew their spending by 9.7% and 147.7%, respectively.

A rush of AI orders has made TSMC expand its packaging production to keep up with chip demand from the high-performance computing and data processing industries. Image: TSMC

TSMC enjoys the status of being the only Taiwanese leading-edge chip manufacturer. Other Taiwanese firms, such as UMC, focus their efforts on older and mature technology nodes. These are lower in selling price but also enjoy the advantage of stable demand and lower costs. At the same time, the technological advantage enjoyed by TSMC’s products means that it can charge top dollar to its customers.

This is also reflected in the operating income data shared by the economic ministry. Operating income is the money a firm has left before interest and taxes are paid, and for TSMC, this figure stood at NT$907 billion last year. This marked a 16.8% annual drop but was considerably larger than UMC’s earnings of NT$48.7 billion. It also made TSMC the largest listed manufacturer in Taiwan in terms of operating income.

However, while its highly capital-intensive business model and wider margins propelled TSMC to the top of the manufacturing sector for spending and operating income, revenue-wise, Apple’s primary contract manufacturing partner for the iPhone, Foxconn, earned the most revenue in 2023. Foxconn raked in NT$3.45 trillion during the year, NT1.3 trillion higher than TSMC’s revenue.

The article is in Dutch

Tags: TSMC Tops Taiwan Highest Spender Among Locally Listed Manufacturers


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