Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which supplies chips for Apple Inc’s iPhones, yesterday posted a record-high net profit for last quarter, driven by strong demand for chips made using advanced technologies for 5G-related and high-performance computing applications.
During the final quarter of last year, TSMC’s net profit jumped 16.1 percent to NT$116.04 billion (US$3.87 billion), compared with NT$99.98 billion in the same period the previous year. That represented a quarterly increase of 14.8 percent from NT$101.07 billion.
As growth momentum is expected to extend into the next few years, the chipmaker this year plans to budget for capital expenditure of between US$15 billion and US$16 billion, mainly on 7-nanometer (nm), 5nm and 3nm technologies.
That surpasses TSMC’s capital spending of US$14.9 billion last year.
TSMC expects strong customer demand to boost the sector’s revenue by 17 percent year-on-year this year, with its own growth outperforming the sector and reaching its highest level in about six years.
That prompted the company to raise its long-term revenue growth estimate, saying that growth would approach the high end of a 5 to 10 percent compound annual growth rate in the long run.
“We are confident that we can outperform the foundry sector’s revenue growth by several percentage points in US dollar terms,” TSMC chief executive officer C.C. Wei (魏哲家) told an investors’ conference in Taipei.
Growth would be supported by chips used in mobile phones and for high-performance computing platforms, which are to grow more than 20 percent annually this year, Wei said.
“We need to increase capital spending as we are working closely with customers to fulfill their demand,” he said.
TSMC plans to ramp up production of chips using its 5nm technology by the end of this year and expects the newest technology to contribute 10 percent to its total wafer revenue this year.
Though the US government is expected to tighten its curbs on technology exports to Huawei Technologies Co (華為), TSMC does not expect the restrictions to dampen 5G momentum, it said.
“Whatever export controls are coming, we think 5G momentum will continue, as the disruption would be short term going through the supply chain,” TSMC chairman Mark Liu (劉德音) told investors. “I think the momentum will be just as strong.”
However, TSMC denied market speculation that it is facing mounting pressure from Washington to build new capacity in the US, given ongoing geopolitical tensions.
The chipmaker has been evaluating the feasibility of building fabs outside Taiwan, including in the US, but no substantial decision has been made, it said.
Earnings per share rose to NT$4.47, from NT$3.86 the previous year and NT$3.9 a quarter earlier.
Gross margin climbed to 50.2 percent, compared with 47.7 percent the previous year and 47.6 percent in the previous quarter.
TSMC said it saw greater revenue contribution from 7nm technology, which accounted for 35 percent of total revenue last quarter, up from 23 percent the previous year and 27 percent a quarter earlier.
For the whole of last year, revenue rose 3.73 percent from NT$1.031 trillion in 2018.
Despite the effects of seasonal factors on demand for mobile products, TSMC’s business is expected to be better than seasonality this quarter compared with previous years, thanks to demand due to new 5G smartphones, TSMC chief financial officer Wendell Huang (黃仁昭) said.
Revenue would be in the range of US$10.2 billion and US$10.3 billion, representing about a 1.4 percent quarterly decrease, it said, adding that gross margin is to be between 48.4 percent and 50.5 percent this quarter.
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