5G and HPC to Boost Q1 Revenue for TSMC

Article By : Nitin Dahad

TSMC sees huge year-on-year quarterly revenue growth but outlook is flat.

TSMC reported 45.2% revenue growth for Q1 2020 compared to the same period last year, driven by 5G and high-performance computing (HPC) products. However, compared to Q4 2019 it declined marginally by 0.8%, and the outlook for the second quarter of 2020 is flat.

Revenue was US$10.31 billion for the three-month period ending March 31, 2020.  The rule of thumb in the industry is that the first quarter business usually declines due to the seasonality. Wendell Huang, VP and chief financial officer for TSMC, commented, “Our first quarter business declined less than seasonality, due to the increase in HPC-related demand and the continued ramp of 5G smartphones. Moving into second quarter 2020, we expect our revenue to be flattish, as weaker mobile product demand is expected to be balanced by continued 5G deployment and HPC-related product launches. The company said that based on its current business outlook, it expects revenue for the second quarter to be between US$10.1 billion and US$10.4 billion.

In the first quarter, shipments of 7-nanometer accounted for 35% of total wafer revenue and 10-nanometer process technology contributed 0.5% while 16-nanometer accounted for 19%. Advanced technologies, defined as 16-nanometer and more advanced technologies, accounted for 55% of total wafer revenue.

TSMC revenue by process technologies 2019
Proportion of TSMC revenue by process technology resolution from 2017-2019. (Source: TSMC).

In 2019, TSMC’s annual capacity in 12-inch equivalent wafers was approximately 12.3 million wafers. In terms of geographic split, 60% of 2019 revenue was from US-headquartered companies, and 20% from China headquartered companies; it saw 18% growth in orders from China in 2019 compared to 2018. In its 2019 report, TSMC indicated two customers representing more than 10% of revenue – one which brought in 23%, and the other bringing 14% of revenue. It is widely believed that TSMC’s largest customer is Apple, and the second largest is Huawei.

In terms of net revenue by product categories, smartphone platforms accounted for 49% of TSMC’s business in 2019, while high performance computing accounted for 30%.

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