The Rundown: TSMC CapEx Increase, Yulon Group Prospects, and E-Billing

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TSMC raises capital expenditures to increase capacity

Taiwan Semiconductor Manufacturing Co (TSMC), the world’s leading contract manufacturer, said at a investor conference on April 15 that it would again raise its capital expenditures for 2021 to NT$30 billion, up 74% from last year as Taiwan’s back-end equipment, plant engineering, wafer manufacturing, automation, packaging equipment, and other industries are all expected to enter a period of accelerated growth.

TSMC announced earlier this month that it would spend NT$100 billion over the next three years – or NT$33.3 billion a year – to increase production capacity to meet increased demand for growth. That is a sharp increase from the NT$25-28 billion it had estimated at the time.

The company expects its annual revenue to increase by 20% this year.

“We expect capacity constraints to continue through 2022, with customers asking for more inventory,” TSMC CEO C.C. Wei said. “We see stronger demand for 5-nanometer and 3-nanometer chips. Currently, capacity is in short supply. Chips are out of stock; thus, capital spending must increase.”

Wei said the NT$100 billion in capital expenditures would be used to support manufacturing and R&D of leading-edge and specialized processes, enabling TSMC to maintain revenue growth in the 10-15% range over the next five years. “Once again, our investment in future capacity is driven by a three-year plan developed in close collaboration with our customers, with fundamentals reflecting an accelerating digital transition,” said Wei.

Yulon expresses cautious optimism about 2021 prospects

Yulon Group is taking a conservative approach to the Taiwan car market in 2021, revising its forecast of total annual sales to 438,000 units, a 4.2% decrease from last year.

The company is also continuing its efforts in the electric vehicle (EV) battery-assembly business and is actively developing its green energy operations. Its first batch energy storage products was exported to the U.S. in December last year, with 35MW exported in Q1 2021. At the same time, Yulon maintains intensive contact with partners in the EU and with other potential customers regarding new orders and aims to export 1-1.3GW of energy storage products by 2023.

Nevertheless, Yulon expects a big leap in profits this year.

Luxgen Motor Co., Yulon’s domestic car brand, experienced a change of fortunes in the first quarter after struggling to balance its profits and losses over the past year. In addition, the MIH Open Platform for EVs promoted by the joint venture established between Yulon and Hon Hai Precision Co., is currently in full swing.

Lastly, three of Yulon’s subsidiaries, China Motor Corporation, Yulon Nissan Motor Co., and Yulon Finance Corporation, have continued to perform well this year and are expected to transfer investment income back to the parent company.

Yulon has also provided an update on the development of its development project in the Xindian District of New Taipei City. The company stated that floors B1F to 4F of the center will be rented to the Eslite Spectrum Corp. and Vieshow Cinemas will lease floors 6F to 8F. Yulon expects the space to open in Q4 2022.

Taiwan banks take new approach to promote e-billing

DOMI Earth, an environmental solutions company, has teamed up with Taishin International Bank, King’s Town Bank, and DBS Bank Taiwan to promote a new approach to phasing out paper bills. Under the program, part of the savings from switching customers to electronic billing will be used to assist “energy-poor households” whose energy expenditures exceed 10% of their total income. 

DOMI says that financial statements constituted the most significant proportion of paper bills at 42.9% and that in recent years, around 220,000 new credit cards are issued by mail each month. According to industry estimates, the proportion of customers choosing to use paper bills is still as high as 70%. The company says it will take the participation of both banks and consumers to resolve this issue.

DOMI also pointed out that, in addition to paper, Taiwan bills also contain clear plastic, a complex material. Taiwan is expected to produce 900 million paper bills each year. The production of pulp alone will contribute 36.72 million kilograms of carbon emissions, about 2.3 times that produced by the manufacture of plastic straws.

Taishin International Bank, which serves six million credit card users, began working with DOMI in 2018 to promote e-billing. As the collaboration enters its fourth year, one million of those customers have switched to e-billing.

Huang also said that every 10,000 customers that switch from paper bills to e-billing could save banks NT$960,000 a year in bill printing and postage costs.

This edition was translated from the original Chinese by Austin Babb.

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