Taiwan Semiconductor leads chipmakers’ sales surge ahead of new iPhones

HONG KONG • Taiwan Semiconductor Manufacturing Co Ltd (TSMC) reported a stronger than expected 22% rise in quarterly sales, buoyed by orders from its largest customers including Apple Inc.

The world’s largest contract chipmaker saw revenue for the three months to September climb to a record NT$356.4 billion (RM51.6 billion), up from NT$293 billion a year earlier, according to Bloomberg calculations based on monthly sales data disclosed by TSMC. Fellow Taiwanese chipmakers United Microelectronics Corp (UMC) and MediaTek Inc yesterday also reported strong sales, suggesting a broad recovery in the industry.

TSMC in July raised its 2020 outlook, saying that revenue this year will grow by more than 20% in dollar terms. Sales for the first nine months of the year suggests that Apple’s main iPhone chipmaker is on track to meet its growth forecast as the Covid-19 pandemic fuelled demand for home computing equipment.

The company’s business typically revs up in the months before Apple unveils new iPhones and the holiday season. It also likely received a boost during the quarter as its second-largest customer Huawei Technologies Co Ltd raced to stockpile supplies before a US ban on shipments to the Chinese telecom giant came into effect last month. Rival chipmaker Samsung Electronics Co Ltd reported yesterday earnings that beat analyst estimates after its mobile and chip businesses benefitted from the curbs on Huawei.

“The demand strength will sustain and see an upside risk to TSMC’s fourth quarter of 2020 (4Q20) revenue guidance to be announced next week,” Bernstein analysts led by Mark Li wrote in a note. “The ramp of iPhone is delayed but just makes 4Q20 sequentially stronger. Apple silicon is ramping and will fuel the momentum in 4Q20 too. More recently, Huawei’s competitors are aggressive in placing orders, all vying to gain the share left by Huawei.”

Monthly figures released yesterday showed UMC’s 3Q revenue was NT$44.9 billion, roughly in line with the average estimate of analysts surveyed by Bloomberg. MediaTek, which also counts Huawei as one of its largest customers, reported monthly revenue jumped 61%, helping to lift 3Q sales to NT$97.3 billion. That exceeded the NT$86.3 billion forecast by analysts.

TSMC gained 2.3% yesterday in Taipei and closed just shy of its all-time high reached on Sept 16. The shares have surged nearly 83% from their March lows amid signs that the company is bouncing back from the worst of the Covid-19-induced disruptions. MediaTek shares gained 3.6% while those of UMC, which have nearly doubled this year, surged more than 9% before the release of the sales numbers.

It’s reported that about two-thirds of TSMC’s 5-nanometer capacity has been taken up by Apple’s newest A14 processors in the run-up to the release of the new iPhones.

The Taiwanese chipmaker is scheduled to hold its third-quarter earnings conference on Oct 15. — Bloomberg