TSMC expects 5G to significantly boost its figures
What you need to know
- Apple chip supplier TSMC has reported strong Q3 sales, with revenue up 10% YOY.
- 13.5% rise in net profit is strongest growth since Q1 of 2017.
- Introduction of 5G to smart phones should bring dramatic boost in 2020, plans to increase spending by $5 billion as a result.
Apple chip supplier TSMC has reported extremely strong Q3 performance fuelled by high smartphone demand, seeing its strongest growth since Q1 of 2017.
According to Reuters
TSMC reported a 13.5% rise in third quarter net profit to T$101.07 billion ($3.30 billion), its strongest growth since the first quarter of 2017, thanks to strong sales to smartphone makers.
The profit figure compared with a T$96.33 billion average forecast drawn from 20 analysts, according to Refinitiv data.
Revenue rose 10.7% to $9.4 billion, compared with the company’s own estimate of $9.1 billion to $9.2 billion.
Sales earned from smartphone makers accounted for 49% of its total revenue, up from 45% from a year ago, while China sales amounted to 20%, up from 15%, making up for modest slowdown in every other major region including North America.
Not only is TSMC reporting extremely strong performance to date, forecasts for the future are increasingly optimistic. Fourth-quarter revenue is expected to come in between $10.2-10.3 billion, up from $9.4 billion a year ago. Not only that, TSMC expects the demand for 5G next year to propel its performance even further. As a result it has raised its 2019 capital spending plan by nearly $5 billion. According to the report:
“5G smartphone growth momentum is stronger than we expected… We have good reasons to increase our capex this year and next year,” TSMC CEO C.C. Wei told an earnings briefing after reporting the Taiwanese company’s strongest quarterly profit growth in more than two years.
Wei said TSMC almost doubled its forecast for fifth-generation (5G) smartphone penetration for 2020 to mid-teen percent from a forecast of single digit made just six months ago.
The news comes fresh off the back of analyst predictions suggesting that Apple will release four 5G capable iPhones next year. The fairly outlandish proposal was made by Dan Ives, who also reported “much better” than expected demand for the iPhone 11 in China.