Mobile chips used in Apple Inc products may account for 20 percent of the sales of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in the next two years, according to a Barclays PLC research note.
That would be a significant increase from the less than 5 percent share of the world’s largest chipmaker’s sales contributed by Apple in the first quarter of this year, the British bank said in the research note on Friday last week.
Barclays Asia-Pacific semiconductor analyst Andrew Lu (陸行之) said the new chips TSMC makes for Apple could include A8 and A9 application processors, as well as integrated circuits designed for fingerprint sensors and the rumored “iWatch” wearable device.
TSMC could also benefit from a technology shift to the advanced 64-bit ARM-based chips for smartphones and micro servers, which could contribute “incremental growth” to TSMC’s sales in the next few years, he said.
In the first three months of the year, TSMC reported higher-than-expected consolidated sales of NT$148.22 billion (US$4.91 billion) on rising demand for chips that employ the advanced 28-nanometer (nm) process.
Analysts said TSMC’s latest sales data showed that the company has not been affected much by the traditional slowness seen in the IC industry in the first quarter.
“Higher sales and NT dollar depreciation should lift [TSMC] gross margins at least in-line with the 47 percent guidance,” Credit Suisse analyst Randy Abrams said in a report yesterday.
Credit Suisse said TSMC’s sales would increase 15 percent this quarter from last quarter, and forecast the company’s sales for the second half of the year could improve further as its ramps up shipments for Apple’s new products and when China migrates into the long-term evolution telecom network.
TSMC shares closed up 0.42 percent at NT$120.5 yesterday on the Taiwan Stock Exchange.
Barclays gave TSMC shares an “overweight” rating and revised its target price to NT$160 from NT$139. The brokerage also raised its estimates for TSMC’s earnings per share for this year by 7 percent to NT$8.92 and by 4 percent to NT$9.54 for next year.
Credit Suisse maintained its “outperform” rating with the NT$130 target price.
“We stay positive with TSMC’s business holding better in 2014 on 28nm and 20nm strong share sustaining and into 2015 where 16nm FinFET tape-outs are also building and dividend may start rising,” Abrams said in the report.
TSMC is scheduled to release its first quarter earnings results and give its second quarter sales guidance at an investor conference on Thursday.
Additional reporting by Kevin Chen