TSMC Leads Chipmakers’ Sales Surge Ahead of New iPhones

(Bloomberg) — Taiwan Semiconductor Manufacturing Co. reported a stronger-than-expected 22% rise in quarterly sales, buoyed by orders from its largest customers including Apple Inc.


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The world’s largest contract chipmaker saw revenue for the three months to September climb to a record NT$356.4 billion ($12.4 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. and MediaTek Inc. on Thursday 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 fueled 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. raced to stockpile supplies before a U.S. ban on shipments to the Chinese telecom giant came into effect last month. Rival chipmaker Samsung Electronics Co. reported on Thursday earnings that beat analyst estimates after its mobile and chip businesses benefited from the curbs on Huawei.

chart, pie chart: Market Leader

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Market Leader

“The demand strength will sustain and see an upside risk to TSMC’s 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 Thursday showed UMC’s third-quarter 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 third-quarter sales to NT$97.3 billion. That exceeded the NT$86.3 billion forecast by analysts.

TSMC gained 2.3% on Thursday 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 coronavirus-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.

chart: Taiwan's biggest chipmakers have rallied this year, led by UMC

© Bloomberg
Taiwan’s biggest chipmakers have rallied this year, led by UMC

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, Taipei-based Economic Daily News reported this week, citing unidentified industry sources. The handsets are expected to be unveiled next week.

Video: Samsung Electronics shares trading in anticipation of a chip price recovery next year: Analyst (CNBC)

Samsung Electronics shares trading in anticipation of a chip price recovery next year: Analyst



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

What Bloomberg Intelligence Says

Taiwan Semiconductor Manufacturing’s 3Q sales of NT$356 billion, despite a strengthening New Taiwan dollar, is 5% above company guidance. This may be driven by stronger-than-expected 5-nanometer A14 chipset orders from Apple and mature-node chips, in addition to rush orders from Huawei. It also implies that TSMC’s 3Q operating profit may beat consensus by more than 11%, by our calculations, assuming an operating margin of 41%.

– Charles Shum and Simon Chan, analysts

Read the research here.

(Adds monthly sales figures from MediaTek, UMC starting from second paragraph.)

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