An Empirical Study of Value Creation Drivers in Semiconductor Foundry Industry

碩士 === 國立政治大學 === 金融研究所 === 101 === Advanced semiconductor manufacturing is at an inflection point with escalating R&;D intensity and capital expenditure requirements for new fabrication plants of leading process. However, investors are concerned whether tremendous capital expenditure could gene...

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Main Authors: Chiang, Chieh Kuan, 江玠寬
Other Authors: Chen, Wei Kuang
Format: Others
Language:en_US
Online Access:http://ndltd.ncl.edu.tw/handle/gy25e2
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spelling ndltd-TW-101NCCU52140372019-05-15T20:53:29Z http://ndltd.ncl.edu.tw/handle/gy25e2 An Empirical Study of Value Creation Drivers in Semiconductor Foundry Industry 創造公司價值因素之探討—以半導體晶圓代工產業為例 Chiang, Chieh Kuan 江玠寬 碩士 國立政治大學 金融研究所 101 Advanced semiconductor manufacturing is at an inflection point with escalating R&;D intensity and capital expenditure requirements for new fabrication plants of leading process. However, investors are concerned whether tremendous capital expenditure could generate return and create value to the company in this competition. Therefore, the objective of this study is to examine the foundry firms’ value by adopting the concept of Economic Value Added (EVA), measuring the excessive return that a company can generate over the cost of capital. At first, this study tests the power of EVA to capture the relationship between a company’s market value and EVA of foundries. As EVA may be affected by numerous financial value drivers, this research examines and ascertains which factors are relevant. Furthermore, this study also monitors the EVA of these firms to determine their relationship with the semiconductor cyclical index. The primary findings of this study are illustrated as below. EVA is systematically linked to market value in foundry industry. In addition, foundries with higher operating profit margin and higher capital expenditure could create more firms’ value while foundries with higher cost of capital and financial flexibility would destroy its value. Moreover, foundries’ EVAs are not been significantly affected by growth of sales, investments in working capital, and semiconductor cycle index. Furthermore, this paper also conducts a case study to analyze why TSMC creates EVA continuously: (1)TSMC increases returns on existing capital while holding WACC and invested capital constant. (2)TSMC reduces the cost of capital by leveraging low interest rate and low beta. (3)TSMC makes new investments that earn returns greater than the WACC. (4)TSMC sustains the competitive advantage of technological leadership which enables the company to generate above-normal returns for a longer period. Chen, Wei Kuang 陳威光 學位論文 ; thesis 74 en_US
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description 碩士 === 國立政治大學 === 金融研究所 === 101 === Advanced semiconductor manufacturing is at an inflection point with escalating R&;D intensity and capital expenditure requirements for new fabrication plants of leading process. However, investors are concerned whether tremendous capital expenditure could generate return and create value to the company in this competition. Therefore, the objective of this study is to examine the foundry firms’ value by adopting the concept of Economic Value Added (EVA), measuring the excessive return that a company can generate over the cost of capital. At first, this study tests the power of EVA to capture the relationship between a company’s market value and EVA of foundries. As EVA may be affected by numerous financial value drivers, this research examines and ascertains which factors are relevant. Furthermore, this study also monitors the EVA of these firms to determine their relationship with the semiconductor cyclical index. The primary findings of this study are illustrated as below. EVA is systematically linked to market value in foundry industry. In addition, foundries with higher operating profit margin and higher capital expenditure could create more firms’ value while foundries with higher cost of capital and financial flexibility would destroy its value. Moreover, foundries’ EVAs are not been significantly affected by growth of sales, investments in working capital, and semiconductor cycle index. Furthermore, this paper also conducts a case study to analyze why TSMC creates EVA continuously: (1)TSMC increases returns on existing capital while holding WACC and invested capital constant. (2)TSMC reduces the cost of capital by leveraging low interest rate and low beta. (3)TSMC makes new investments that earn returns greater than the WACC. (4)TSMC sustains the competitive advantage of technological leadership which enables the company to generate above-normal returns for a longer period.
author2 Chen, Wei Kuang
author_facet Chen, Wei Kuang
Chiang, Chieh Kuan
江玠寬
author Chiang, Chieh Kuan
江玠寬
spellingShingle Chiang, Chieh Kuan
江玠寬
An Empirical Study of Value Creation Drivers in Semiconductor Foundry Industry
author_sort Chiang, Chieh Kuan
title An Empirical Study of Value Creation Drivers in Semiconductor Foundry Industry
title_short An Empirical Study of Value Creation Drivers in Semiconductor Foundry Industry
title_full An Empirical Study of Value Creation Drivers in Semiconductor Foundry Industry
title_fullStr An Empirical Study of Value Creation Drivers in Semiconductor Foundry Industry
title_full_unstemmed An Empirical Study of Value Creation Drivers in Semiconductor Foundry Industry
title_sort empirical study of value creation drivers in semiconductor foundry industry
url http://ndltd.ncl.edu.tw/handle/gy25e2
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