TSMC posts record quarterly profit on demand for advanced chips

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Taiwan Semiconductor Manufacturing said quarterly net profit surged 81% to a record level and predicted hefty revenue gains for the third-quarter on robust orders for advanced chips.

KEY POINTS:

  • TSMC said quarterly net profit surged 81% to a new record level for the company
  • The business also predicted revenue gains as high as 22% for the third quarter
  • TSMC shares have risen about 10% this year, giving it a market value of some $320 billion

High-performance chips used in 5G telecommunications and other new technologies have been in strong demand, particularly as more people work from home and companies scramble to add more bandwidth amid the coronavirus pandemic.

The world’s largest contract chipmaker estimated third-quarter revenue could climb as much 22% from a year earlier to $11.5 billion, a forecast that comes despite losing Huawei Technologies¬† as a customer after the US slapped a ban on selling to the Chinese company.

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“We expect our business to be supported by strong demand for our industry-leading 5 nanometre and 7 nanometre technologies, driven by 5G smartphones, high-performance computing and IoT-related applications,” CFO Wendell Huang told a briefing.

April-June net profit came in at T$120.8 billion (approximately $4.1 billion), 8% ahead of market expectations, while revenue for the quarter climbed 34.1% to $10.4 billion.

Underscoring its bullish outlook, it lifted capital spending plans for this year to $16-$17 billion from a prior estimate of $15-$16 billion. It spent $14.9 billion in 2019.

TSMC, which counts Apple and Qualcomm among its customers, said it has made decent progress in filling up capacity since the loss of Huawei orders. It stopped taking new orders from the Chinese telecommunications and smartphone giant in May and does not plan to ship wafers after Sept. 15.

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TSMC unveiled plans for a $12 billion plant in Arizona in May, a move widely seen as currying favour with the US as Washington spars with over Beijing over trade and Huawei.

The plant will make advanced 5 nanometre chips and is due to start operating in 2024, targeting production of 20,000 wafers per month, the company said on Thursday.

TSMC also said it expects the global market for contract chip manufacturing to show mid- to high-teens percentage growth this year, up from a previous forecast of a high single-digit to low teens percentage growth.

TSMC shares have risen about 10% this year, giving it a market value of $320 billion, overtaking US rival Intel Corp which now has a market value of $249 billion.

Via our content partners at Thomson Reuters. Reporting by Yimou Lee and Ben Blanchard; Editing by Edwina Gibbs.

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