TSMC Profits Jump on Demand for Chips from iPhone

CIOReviewIndia Team | Thursday, 16 April 2020, 10:37 IST

TSMC Profits Jump onDemand for Chips from iPhone

Taiwan Semiconductor Manufacturing Co Lim (TSMC), thelargest contract chipmaker in the world has almost doubled its first quarter net profit despite the ongoing coronavirus crisis as demand for chips increased.The company whose clients include major tech giants such asApple Inc. reportedits profit in the January-March period as T$116.987 billion ($3.89 billion), up 90.6% from the previous year.This is the result ofincreased demand for advanced chips from its clients that primarily are investing in technologies such as AI and 5G.

Pointing at the slowed manufacturing in China amid travel restrictions and complete lockdowns in the wake of Covid-19, Apple, one of the major clients of TSMC rescinded its 2020 first quarter outlook. In spite of Apple’s withdrawal of the outlook, revenue of TSMC that also makes semiconductors for laptops, phones and other devicesrose over 42 percent in the first quarter.    The company spent over $6 billionon technology and production upgrades during the quarter. The company is planning to allocate $15 billion to $16 billion for capital spending in 2020, up from last year’s which was $14.9 billion.

“We don’t see any significant reduction in our customer demand. But we do expect the end-demand will have some impact in the second half of this year,” said C.C. Wei, Chief Executive Officer of TSMC. Apple iPhone shipments in China jumped 19 percent in the month of March, which is a positive sign for TSMC. However, in the longer term, TSMC as every other enterprise will get affecteddue to the global economic turmoil and the U.S.-China trade war. According to research firm IDC, the worldwide shipments of smartphones, which is a major growth driver for TSMC, are expected to decline 2.3% to 1.3 billion units in 2020 due to the Covid-19 outbreak. Gartner has forecasted theglobal semiconductor revenue to decline 0.9 percentin 2020.

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