TSMC’s [1] investor meeting brought the company’s stock price soaring skyrocket with almost 7% in the next transaction day. According to TSMC’s latest investor meeting held on Apr. 16th 2020, the company declared a stunning business result and guidance.
The first highlight was its sales of 1Q 2020 reached US$10.3 billion (+42% YoY), which beat the expectation and also a good start for this particularly tough year. To glimpse its revenue numbers in the past three years (the bar chart below), the company has merely achieved moderate revenue growths with 3% to 5%. That’s why the +42% YoY revenue growth in 1Q 2020 was an exciting news. The annual sales growth pace remains the anticipation of 5% to 10%.
In terms of the final product applications, the smartphone accounted for 49% which again the largest portion. The growth rate of Smartphone dropped 9% QoQ due to COVID-19. However, the booming demand of 5G smartphone is expected to be a drive to (long-term) future growth. On the other hand, High-performance computing (HPC) was another growth-driven engine which contributed 30% in revenue. HPC section grew 3% in the previous quarter showing the forecast of the server industry had not influenced by the pandemic (yet).
7nm product contributed the most portion of 35% in 1Q sales, which were mainly from smartphone. While 16 nm and 28 nm combined accounted for 33%.
The other highlight was the CAPEX will remain the previous plan at $15 to $16 billion in 2020, the highest number ever. This implied the positive business forecast in both advanced products and applications even amid the COVID-19 pandemic.
Currently, new nano-meter processes are on track:
- 6nm IC product will be expected to contributed more than 30% this year.
- 5nm product is expected to start production in 2H20
- 3nm product will start mass production in 2H22
The company assumed the pandemic will be well controlled in June and remained the positive operation forecast although the smartphone section is expected somewhat 9% recession.
Amid this huge impact of pandemic, TSMC’s biggest client, Apple, has announced the latest version of iPhone SE. The processor A13 bionic is embedded in the newly launched phone, which is used on its flagship iPhone 11 last year. The price range started from $399 (64G), $449 (128G) to $549 (256G), making the new iPhone SE irresistible. The pricing strategy may be regarded as not only the fightback to the pandemic, but also a game-changer for the smartphone market. No matter what, TSMC is the winner for solely manufacturing A13 chips.
However, on the other hand, TSMC’s second largest client Huawei is not that optimistic about the pandemic impact. Huawei has cut the orders of 5nm CPU to TSMC and then TSMC transfer the capacity to Apple. In addition, there was a rumor once said Apple may defer its new A14 chip for 1 or 2 quarters, but another source revealed a conflicting point which the A14 mass production is still on track. Besides, on the investor meeting, TSMC announced its 5nm product is expected to start into mass production in 2H 2020. Although the big uncertainties still exist right now, the latest analysis believes the mass production of the next generation A14 still on track.
Notes:
TSMC (Taiwan Semiconductor Manufacturer Company, Taiwan stock market ticker: 2330/NTSE: TSM )is the biggest IC foundry manufacturer in the world. The company has played one of the most important role among the electronic industry, most of the influential tech companies are its long-term clients and partners, e.g, Apple, Qualcomm, Nvidia…etc.
