TAIPEI: Taiwan Semiconductor Manufacturing Co (TSMC) likely chalked up its fastest pace of profit growth in a decade, after the Taiwanese company cemented its role as chipmaker of choice to the world’s technology and auto giants.
The world’s largest contract chipmaker is projected to report a 48.6% rise in 2020 net income, its speediest rate of expansion since 2010. Investors have sent its stock soaring 70% since the start of 2020, betting that the likes of Apple Inc will continue to lean on its widening technological lead over Samsung Electronics Co.
On Tuesday, Bernstein analysts raised their target on its shares to NT$800, anticipating a further gain of more than 30%.
Taiwan’s largest company has spent billions in past years ensuring it remains at the forefront of chipmaking technology – a costly exercise that paid off after Covid-19 sent millions online and powered demand for smartphones and computers.
With chips becoming ubiquitous in everything from cars to fridges, it’s now become a lynchpin in a plethora of sectors including automaking.
As rivals like United Microelectronics Corp fall behind and Semiconductor Manufacturing International Corp struggles with American sanctions, TSMC’s pivotal role is likely to expand in 2021.
Already, its preference for larger-volume electronics clients is exacerbating a severe shortage of automotive chips that’s forcing firms like Honda Motor Co and Volkswagen AG to curtail production. Even Intel Corp is now said to be considering outsourcing to the Asian firm after a series of inhouse technology slip-ups.
“The world needs advanced silicon and only TSMC has that, ” Bernstein’s Mark Li wrote. “There is risk if Intel regains and keeps tech superiority, but scale and execution record make it unlikely.”
TSMC “is everyone’s foundry and treats its customers fairly and equally, ” the chipmaker said in a statement, stressing that it doesn’t play favourites.
Apple’s main chipmaker has predicted that the industry “mega trends” of 5G and high performance computing-related products will continue to drive growth over the long term. It’s expected to report a 14% rise in net income for the December quarter off record sales, moderating from the heady pace of expansion in previous months.
Today, investors will want to see if TSMC will set aside another record amount for capital spending in 2021, after shelling out an estimated US$17bil last year to maintain its edge. — Bloomberg