Semiconductor giant TSMC upbeat on 2020 sales for 5G phones and fast computers

17, Jan. 2020

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TAIPEI, NNA - Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, on Thursday projected revenue between $10.2 billion and $10.3 billion in the first quarter of 2020 due to orders for 5G mobile technology and high-performance computing.

The Taiwan-based, New York-listed firm better known as TSMC further forecast a gross first-quarter profit margin of 48.5 to 50.5 percent with an operating profit margin of 37.5 to 39.5 percent.

Investors anticipate a rollout of 5G networks in much of the world this year along with devices that can support 5G service. The growth of TSMC – big enough that it’s often seen as a bellwether for the world semiconductor industry as a whole – this year will likely come from mass production of chips for Apple’s next-generation iPhones and Huawei’s new Mate-series models that are popular in Asia.

TSMC has targeted a combined annual growth rate of 5 to 10 percent on expectations of strength in 5G technology and high-performance computers applications this year. Central processing units, networking and artificial intelligence mark growth areas for high-performance computers, Chief Executive Officer C.C. Wei told an investor conference on Thursday.

The company has set its 2020 capital expenditure budget of $15 billion to $16 billion, 80 percent of which will be allocated to advanced process technologies, 10 percent to advanced packing and mass manufacturing and the remaining 10 percent for specialty technology, Vice President and Chief Financial Officer Wendell Huang told the conference.

The company spent $5.55 billion on capital investment in the fourth quarter of 2019, up from $3.14 billion in the third.

TSMC reported consolidated revenue equivalent to $10.39 billion in the October-December quarter, up 9.5 percent on year, and a net profit equal to $3.86 billion, up 16.1 percent.

That better-than-expected fourth quarter performance was mainly due to “better demand from smartphone-related applications than our forecast three months ago,” Huang said.

Orders for smartphone chips comprised 53 percent of sales in the most recent quarter while orders for high-performance computer chips made up 29 percent and processors for internet of things came to 8 percent.

Wei forecasts that the semiconductor industry, excluding memory, will see 8 percent growth this year and TSMC would outperform its peers.

TSMC’s CEO C.C. Wei (2nd from L) and Chief Financial Officer Wendell Huang (2nd from R) give an upbeat forecast for 2020 at an investor conference in Taipei on Jan. 16, 2020. (NNA)
TSMC’s CEO C.C. Wei (2nd from L) and Chief Financial Officer Wendell Huang (2nd from R) give an upbeat forecast for 2020 at an investor conference in Taipei on Jan. 16, 2020. (NNA)