TSMC logs record quarterly profit as clients clamour for advanced chips

Outlook rosy after Taiwan tech company posts 22% YoY 3Q revenue surge

TSMC logs record quarterly profit as clients clamour for advanced chips
Shiny Future: A logo of Taiwan Semiconductor Manufacturing Co (TSMC) is seen at its headquarters in Hsinchu, Taiwan. REUTERS/Tyrone Siu

Taiwan Semiconductor Manufacturing (TSMC) 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.

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 Co Ltd [HWT.UL] as a customer after the United States slapped a ban on selling to the Chinese company.

It now sees revenue this year up more than 20%, compared with an April target of "mid- to high-teens" percentage growth.

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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," Chief Financial Officer Wendell Huang told a briefing.

April-June net profit came in at T$120.8 billion ($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 Inc <AAPL.O> and Qualcomm Inc <QCOM.O> 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.

TSMC unveiled plans for a $12 billion plant in Arizona in May, a move widely seen as currying favour with the United States 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 U.S. rival Intel Corp which now has a market value of $249 billion.

  • By Yimou Lee and Ben Blanchard at Reuters

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