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Apple Chipmaker TSMC's Revenue Larger Then Anticipated – jj
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Apple Chipmaker TSMC's Revenue Larger Then Anticipated

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(Bloomberg) — Taiwan Semiconductor Manufacturing Co. projected quarterly revenue well above analysts’ estimates, underscoring hopes that the rollout of fifth-generation enabled smartphones in 2020 will galvanize growth for Apple Inc.’s main chipmaker.

TSMC forecast revenue of $10.2 billion to $10.3 billion in the March quarter, surpassing estimates 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 to Huawei Technologies Co. adopted more advanced semiconductors in smartphones.

The robust results demonstrate how the world’s largest contract chipmaker is investing in technology to safeguard its market lead over Samsung Electronics Co. and Intel Corp. TSMC spent almost $15 billion on technology and capacity in 2019 and is prepared to shell out as much as $16 billion this year, anticipating the advent of fifth-generation smartphones. The company, a barometer for the tech industry thanks to its heft and place in the supply chain, has said the advent of 5G will result in more chips in devices than before.

What Bloomberg Intelligence Says

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

Click here for the research.

TSMC’s shares are up 1% this year but have declined over the past two sessions, depressed by uncertainty over U.S.-Chinese tensions despite the signing of a trade deal. Analysts warn about the potential damage to TSMC and the global supply chain if Washington were to tighten existing restrictions on exports to Huawei — the world’s No. 2 maker of smartphones.

TSMC, 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.

On Thursday, TSMC reported better-than-expected net income of NT$116 billion ($3.9 billion) in the December quarter. Gross margins came in at 50.2%, also exceeding estimates.

“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.

(Updates with capital spending estimates in the third paragraph)

To contact the reporters on this story: Debby Wu in Taipei at dwu278@bloomberg.net;Gao Yuan in Beijing at ygao199@bloomberg.net

To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan, Colum Murphy

For more articles like this, please visit us at bloomberg.com

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©2020 Bloomberg L.P.

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