TSMC leaves Q1 sales target unchanged despite Apple sales warning

02/18/2020 08:14 PM

Taipei, Feb. 18 (CNA) Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, said Tuesday that it is leaving its sales target for the first quarter of this year unchanged, despite Apple Inc. issuing a sales warning for the three month period.

TSMC, which serves as a supplier of chips for iPhone production, said it is sticking to its mid-January forecast on the back of expectations of solid demand for 5G smartphones as the world enters the 5G era, with the chipmaker anticipating demand for high performance computing (HPC) devices will drive up revenue.

The company said it expects 5G and HPC gadgets to boost shipments of its high-end processes, making up for slow season effects in the quarter, with the chipmaker forecasting in mid-January that consolidated sales will range from US$10.2-US$10.3 billion, the median figure being just 1.3 percent below the previous quarter.

TSMC's comments came after Apple said overnight that the company did not expect to meet its sales forecast for the January-March period ranging from US$63-US63 billion, due to lower iPhone production and weaker Chinese demand resulting from the outbreak of the novel coronavirus (COVID-19) originated in Wuhan, Hubei Province, China.

Apple said the company was faced with "a slower return to normal conditions than we had anticipated" after the prolonged Lunar New Year holiday in China. Although all iPhone production sites in China have resumed operations after the holiday, Apple said it still expected supply shortages in iPhones globally.

Apple's suppliers produce most iPhones and other products in China.

However, Apple did not give any new sales forecast after the warning.

Meanwhile, international news media said the United States is mulling further sanctions against Chinese telecom equipment supplier Huawei Technologies Inc., adding that the U.S. government could change the Foreign Direct Product Rule to limit the use of American chip-making equipment in a bid to cut off Chinese access to key semiconductor technology.

Sources close to the matter said in the reports that Washington is considering requiring chipmakers worldwide to obtain approval if they want to use American equipment to roll out chips for Huawei.

Currently, Huawei's integrated circuit design arm HiSilicon Technologies Co. Ltd. is one of TSMC's major clients.

In response to reports about Washington's possible measures against Huawei, TSMC declined to answer any hypothetical questions.

In the wake of Apple's sales warning and the possible sanctions against Huawei, shares in TSMC, the most heavily weighted stock on the local market, plunged 2.87 percent to close at the day's low of NT$322.00 (US$10.73) on the Taiwan Stock Exchange Tuesday, sending the benchmark weighted index more than 100 points lower.

(By Chang Chien-chung and Frances Huang)

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