Taiwan Semiconductor Manufacturing Co.’s revenue outlook beat expectations, underscoring the company’s hopes that the rollout of fifth-generation wireless in 2020 will galvanize growth.
TSMC forecast revenue of $10.2 billion to $10.3 billion in the March quarter, versus an average analyst estimate for $9.6 billion. Taiwan’s largest company also posted a fourth-quarter profit that beat the highest analyst’s estimate after customers from Apple Inc. to Huawei Technologies Co. adopted more advanced semiconductors in smartphones.
The robust results demonstrate how the world’s largest contract chipmaker is investing in chip-making technology to safeguard its market lead over Samsung Electronics Co. and Intel Corp. TSMC spent almost $15 billion on technology and capacity in 2019, preparing for the advent of fifth-generation smartphones in coming years. The company, a barometer for the tech industry thanks to its heft and place in the supply chain, has said the advent of 5G-enabled smartphones will result in more chips in devices than before.
Strong sales may extend to 1H off-peak periods, as many of TSMC’s customers such as Huawei, Qualcomm and Mediatek are quickening their pace of adopting cutting-edge processes to prepare for the launch of 5G mobile devices.
– Charles Shum, analyst.
Apple’s main chipmaker reported net income of NT$116 billion ($3.9 billion) in the December quarter, versus an average analyst estimate for NT$111.3 billion. Gross margins came in at 50.2%, also better than expected.
The company, which previously reported record fourth-quarter revenue of NT$317.2 billion, counts Apple and Huawei among its top customers. Chief Executive Officer C. C. Wei has expressed hopes that the emergence of 5G, the foundation of future technologies from automated factories and smart homes to faster consumer electronics, will underpin its business in coming years.
In addition to 5G, TSMC’s counting on growing demand for high-performance computing. Positive comments from Micron Technologies Inc. and Samsung suggest the global semiconductor market is poised for a gradual recovery on the back of demand related to 5G, artificial intelligence and automotive applications.
“5G will ramp sooner or later, and there is no sign that Intel will regain the technology leadership or even narrow the gap soon,” Mark Li, semiconductor analyst at Bernstein, wrote in a report before the results release.
TSMC’s shares are up 1% this year. Analysts have warned about the potential impact if the U.S. were to tighten restrictions on exports to Huawei — potentially encompassing non-American firms like TSMC.
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