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TSMC to post record profits

by on23 April 2018


Despite a downturn in Apple sales 

Despite the fact that Apple lost sales on its over-priced iPhone X, its number one partner TSMC is rumoured to be about to score record profits in 2018.

There were some worries that after Jobs' Mob reduced its orders, TSMC might be set to announce a flat set of financials for this year. It turns out that the company has been ramping up volume production of the 7nm process in the second half of the year to fulfil other orders from Apple for fabricating A12 application processors for its 2018 new iPhone models. The 7nm plant is also seeing strong orders from Qualcomm's new-generation smartphone chips.

The rumours suggest that it is expecting to see its revenue ratio for advanced 7nm process hit a high of 20 percent in 2018, and may post better-than-projected revenues and profits for the second half of the year and register annual revenue growth of over 10 percent.

Some of the doom and gloom stems from the fact that TSMC lowered its revenue growth forecast for 2018 to 10 percent from the earlier projection of 10-15 percent mostly due to weak smartphone demand in the second quarter and growing uncertainty facing the cryptocurrency mining market. Other issues included MediaTek's lacklustre performance in capturing orders for its latest AI-based Helio P60 SoCs from China smartphone vendors in the second quarter.

But  MediaTek is now optimistic that its gross margin and revenues would pick up drastically starting in the second quarter of 2018, as China smartphone vendors including Xiaomi, Oppo and Vivo had claimed to mass adopt MediaTek's Helio 60 chips, prompting the design house to book a foundry capacity of over 30,000 wafers fabricated using TSMC's 12nm process.

Those Chinese manufacturers who were less interested in MediaTek are apparently very interested in Qualcomm's new-generation Snapdragon700 series processors with built-in AI capabilities at highly competitive pricing ahead of schedule in May; This means that while TSMC might lose some MediaTek orders, it will make up the money on Qualcomm orders.

Qualcomm has grabbed large chip orders from non-Apple smartphone vendors and will have TSMC fabricate them in the second half of the year, and the foundry giant is also about to start fulfilling orders for fabricating A12 processors on 7nm node. Accordingly, TSMC's revenue ratio for the smartphone segment is likely to hit a high of 40% in 2018, the sources indicated.

TSMC will see another 40 percent of its annual revenues for the year come from the high-performance computing chips segment. Despite a slowed growth in demand from the cryptocurrency mining market, TSMC is poised to embrace strong demand from the gaming market as its major client Nvidia will soon unveil its new-generation GPU platform. Other top-five clients including Broadcom and Huawei Hisilicon are also queuing for foundry capacities at TSMC. So overall the smart money is on TSMC having record profits rather than the lacklustre results it claims.

 

Last modified on 23 April 2018
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