Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday posted a record-breaking net profit of NT$343.11 billion (US$11.61 billion) for last year, benefiting from robust chip demand for smartphones and cryptocurrency mining machines.
That represented an annual growth of 2.65 percent from NT$334.25 billion in 2016, according to the chipmaker’s financial statement. Earnings per share rose to NT$13.23 from NT$12.89.
While the pace of growth decelerated from 2016’s 10 percent increase, the chipmaker expects the growth momentum to carry on this year.
Photo: Liao Chen-huei, Taipei Times
This year will be “an above-average year,” TSMC founder and chairman Morris Chang (張忠謀) told investors at his last appearance at the company’s quarterly earnings conference.
Chang is set to retire this summer.
Revenue growth would accelerate to between 10 and 15 percent this year in US dollar terms, following a 9 percent increase last year, Chang said.
That would be faster than the company’s five-year target of compound annual growth of between 5 and 10 percent from last year to 2021.
Chang said he expects growth to be fueled by three of the firm’s growth platforms: high-performance computing (HPC), Internet of Things and automotive.
Replacing mobile phone chips, “HPC chips will grow the strongest due to continuing expansion of AI [artificial intelligence] applications in all electronic devices, as well as continuing demand for cryptocurrency GPU [graphics processor unit] and etc,” Chang said in English.
“The urge to mine cryptocurrency is very strong. The [cryptocurrency] price is very volatile, but the demand since the last year has been very strong. We expect it will continue to be strong,” he said.
“However, we will size the demand carefully,” he added.
Mobile phone chips, the biggest revenue contributor to TSMC, would see little growth this year, he predicted.
Based on Chang’s growth projection, TSMC would again outperform the global semiconductor industry’s projected annual growth of between 6 and 8 percent, and the foundry sector’s annual growth of between 9 and 10 percent this year.
However, due to the smartphone industry’s slow-season effect, TSMC expects revenue to shrink by 8.3 percent sequentially this quarter to between US$8.4 billion and US$8.5 billion.
Gross margin is expected to reach between 49.5 percent and 51 percent this quarter, compared with 50 percent last quarter, TSMC said.
The company’s net profit dropped 0.9 percent to NT$99.29 billion in the final quarter of last year, compared with a record-high NT$100.2 billion in the fourth quarter of 2016.
The company attributed the contraction to a 1.5 percent appreciation of the New Taiwan dollar against the US dollar.
On a quarterly basis, net profit increased 10.4 percent from NT$89.93 billion, the company’s financial statement showed.
To support the company’s growth and customer demand, TSMC plans to spend between US$10.5 billion and US$11 billion this year, mainly on new equipment for 7-nanometer manufacturing and developing 5-nanometer technology.
TSMC is on track to start mass production of its 7-nanometer chips — mostly for smartphones and AI applications — next quarter, TSMC cochief executive C.C. Wei (魏哲家) told the conference.
The 7-nanometer chips are to account for 10 percent of the company’s total revenue this year, Wei said.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is