TAIPEI: Taiwan Semiconductor Manufacturing Co (TSMC), chipmaker to Apple Inc and Huawei Technologies Co, has reported a 91% rise in earnings after demand for advanced silicon remained steady during the pandemic.
The world’s largest contract chipmaker reported net income of 116.99 billion New Taiwanese dollars (US$3.9bil) for the three months ended March, compared to 61.4 billion Taiwanese dollars a year earlier.
The robust results from TSMC, a barometer for the tech industry thanks to its heft and place in the supply chain, underscore resilient demand for the semiconductors in smartphones and datacenters that are hosting an unprecedented surge in online activity globally.
Taiwan’s largest company commands a growing position in the production of the high-end chips needed in server capacity for everything from gaming to video streaming. The company also makes semiconductors for laptops, phones and other devices that people are buying for home offices.
TSMC’s revenue rose 42% in the first quarter to 310.6 billion Taiwanese dollars, based on previously reported monthly numbers. That’s despite top customer Apple Inc withdrawing its revenue outlook for the current quarter because of work slowdowns and lower demand in China, its biggest international market.
But official data showed iPhone shipments in China jumped 19% in March, suggesting demand was bouncing back in the world’s top smartphone arena, at least compared with the previous-generation iPhone.
In the longer term, TSMC like other corporations will have to contend with global economic turmoil and fallout from the US-China trade war.
Washington is said to be considering curbs on TSMC’s sales to Huawei, which relies on the chipmaker to produce its most advanced silicon. China’s biggest tech company, which the US accuses of aiding Beijing in espionage, accounts for about 10% of the Taiwanese chipmaker’s revenue. TSMC chairman Mark Liu has downplayed the risk to its business, saying growth will still come from a global 5G rollout.
The company is likely to cut its 2020 sales outlook to reflect competition from Samsung Electronics Co in contract chipmaking and potentially stricter US licensing requirements, Credit Suisse analysts Randy Abrams and Haas Liu wrote April 13. TSMC said in January revenue would grow more than 17% this year. — Bloomberg
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