Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chip manufacturer, yesterday gave a robust outlook for the second half of this year on expectations that accelerating 5G network deployment and launches of premium smartphones would fuel demand for advanced 7-nanometer chips.
After a bleak first half, TSMC chief executive officer C.C. Wei (魏哲家) told investors that “we have begun to see demand increasing.”
“Moving into the third quarter of this year, TSMC’s business continues to be driven by new product launches of premium smartphones, an acceleration of worldwide 5G deployment and increasing adoption of our industry-leading 7-nanometer technology by high-performance computing applications,” Wei said.
Photo: Liao Chen-huei, Taipei Times
The Hsinchu-based chipmaker counts Apple Inc, Hisilicon Technologies Co (海思) and Advanced Micro Devices Inc as major clients.
TSMC expects the growth momentum to carry on into the final quarter of this year, adding that it should be able to attain its goal of growing revenue annually by a low-single-digit percentage this year.
That would allow the company to again outperform the foundry sector, which is forecast to contract by 1 percent in revenue this year, it said.
The company’s upbeat outlook is likely to alleviate concerns that it would have to trim its revenue growth target for this year because of the US-China trade tensions, which might drag down global economic growth, affecting electronics sales and dampening demand for the company’s chips.
As the pace of worldwide 5G deployments has increased in the past three months, TSMC has been building up its 5-nanometer capacity, it said, adding that capital spending could surpass US$11 billion this year.
Faster development of 5G technology is expected to lift demand, firstly for chips used in smartphones and base stations, and then spread to chips used in autonomous vehicles and the Internet of Things, it said.
During the July-to-September quarter, revenues are forecast to surge to between US$9.1 billion and US$9.2 billion, compared with NT$241 billion (US$7.75 billion) for last quarter, TSMC said.
Demand from smartphones would grow the most, followed by high-performance computing applications, it said.
Gross margin would improve about 4 percentage points to 46 percent to 48 percent this quarter, primarily due to higher capacity utilization, TSMC said.
Net profits last quarter dropped 7.6 percent year-on-year to NT$66.77 billion, compared with NT$72.29 billion in the second quarter last year.
That translated into earnings per share (EPS) of NT$2.57, up from NT$2.79 a year earlier.
On a quarterly basis, net profits rose 8.76 percent to NT$61.39 billion, or EPS of NT$2.37.
Gross margin dropped to 43 percent last quarter from 47.8 percent a year earlier due to problems with a supply of photoresistors.
On a quarterly basis, gross margin increased from 41.3 percent in the first three months of the year.
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