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Taiwan Semiconductor Manufacturing Company is increasing its spending on manufacturing equipment as well as on acquisition of other assets. Besides, the firm has increased its capital spending target for the year, which indicates that either TSMC expects market recovery rather shortly or is investing into longer term future due to low prices.

TSMC already spent more than $250 million on semiconductor capital equipment in the recent weeks. Moreover, the company decided to raise its capital spending target for 2009 to $2.3 billion from $1.5 million, reports EETimes web-site. The company is among three semiconductor manufacturers who plan to spend over $1 billion in 2009; the remaining two are Intel Corp. and Samsung Corp.

Based on TSMC’s filings with Taiwan Stock Exchange, the world’s largest contract makers of semiconductors has so far acquired equipment from Applied Materials, ASML, Dainippon Screen Manufacturing, KLA-Tencor, Sokudo, TEL, Varian and so on.

Earlier this year chief executive officer of TSMC said that he would expect markets like China and India to sustain demand for chips, which will play a positive role and will allow company to receive higher revenue than it was expected early in 2009. However, the main question – when other markets like Europe and the U.S. are set to recover – is still not answered.

Increases in capital spending may indicate two things:

  • TSMC expects the semiconductor market to start growing shortly and in order to be able to capitalize on that growth the contract semiconductor maker has to acquire new equipment.
  • TSMC does not expect short-term recovery, but has capital to spend now while the costs of the equipment are low in order to prepare for the better in the longer-term.

Tags: TSMC, Semiconductor, Business

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