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Re: Unkwn post# 143777

Tuesday, 01/26/2016 9:32:43 AM

Tuesday, January 26, 2016 9:32:43 AM

Post# of 151692
Unkwn

As I mentioned already, it's not revenue what pays for CAPEX, neither is it net income but it is cash flow.



Capex comes out of cash flow; free cash flow is cash flow less capex.

TSMC want's to keep its roadmap, they'll have to spend more than 10 billion a year (as comparison: Samsung spent 15 last year)



Um, ok, so first of all the majority of Samsung's Capex spending is for memory capacity (mainly DRAM but also plenty of NAND flash), so this isn't at all apples to apples.

Secondly, TSMC's cash from operations ("cash flow") over the last twelve months was $17B, not $12B. Capex in the last year was ~$8.1B, so TSMC is very nicely free cash flow positive.

Third, I think you may be confused as to capex v.s. R&D spending for process development. The vast majority of capex is to put capacity into place, has nothing to do with a company's ability to R&D a new manufacturing node.

That being said, a big part of the node development expense aside from those expensive engineers/scientists, is the fact that such R&D does require that $ be spent on the equipment that the process engineers use to build the wafers on the process they're developing. This equipment generates zero revenue but obviously costs money to acquire; I believe that the depreciation of this equipment hits the R&D line and not the COGS line because...it doesn't generate any revenue.

Anyway, it's just not a credible argument to say that TSMC can't afford to spend to develop next gen nodes -- it can more than afford to pay for them.

I expect the shrinking race to slow down significantly in the coming years. This gets increasingly difficult and expensive to do.



The key will be finding customers to pay for it. Keep an eye on the health of the high end smartphone market for an indication of what the future holds :P

Could be 3D or some new materials.



I am hearing that Intel has some very big materials science changes coming at 7nm (though I haven't been able to determine the nature of these changes...yet), sadly I am also hearing that 10nm is just a shrink of 14nm :(
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