TSMC expects Q4 sales to rise 3.4%, 2020 growth to hit 30%

10/15/2020 10:44 PM
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Taipei, Oct. 15 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, on Thursday forecast its sales for the fourth quarter will grow 3.4 percent from the third quarter on the back of strong demand for emerging technologies such as 5G applications and automotive electronics devices.

For the entire year of 2020, TSMC's consolidated sales are expected to grow 30 percent from a year earlier, boosted by its efforts in developing high-end technologies, the company said.

In an investors conference, TSMC Vice President and Chief Financial Officer Wendell Huang (黃仁昭) said the company is expected to generate US$12.4 billion to US$12.7 billion in consolidated sales, up from the third quarter's US$12.14 billion.

The fourth guidance was shy of an earlier estimate of an 8-10 percent sequential increase made by foreign institutional investors.

Equity analyst Wang Chao-li (王兆立) said the lower growth forecast made by TSMC reflected a relatively high comparison base in the third quarter, when the chipmaker posted a sequential 14.7 percent increase in Taiwan dollar terms.

The growth rate for 2020 expected by TSMC, however, topped an earlier market estimate of a 24-26 percent increase.

TSMC's 2020 sales growth will surpass the average 20 percent expected by the company for the global pure foundry industry for the year.

C.C. Wei (魏哲家), TSMC's Chief Executive Officer, said the company has maintained the lead over its peers in high-end technology development to gain a higher share in 5G applications and high performance computing (HPC) devices, enabling it to enjoy high revenue growth in 2020.

For the fourth quarter, TSMC said its gross margin -- the difference between revenue and cost of goods sold -- is expected to range between 51.5 percent and 53.5 percent and the median level of 52.5 percent will be 0.9 percentage points lower from the 53.4 percent in the third quarter.

According to TSMC, the expected lower gross margin for the fourth quarter will reflect a relatively small economy of scale in the 5 nanometer process, the latest technology in which the chipmaker has started commercial production. In addition, a stronger Taiwan dollar will also affect the profit margin, TSMC said.

Wei said since strong demand for 5G and HPC gadgets will continue for the next few years, there are no worries over high inventories in the global semiconductor industry.

TSMC said its capital expenditure for 2020 will hit about US$17 billion at the higher end of a US$16 billion-US$17 billion range forecast by the company in mid-July due to solid demand for high-end processes.

In the third quarter, TSMC's net profit hit a new high of NT$137.31 billion (US$4.73 billion), up 13.6 percent from a quarter earlier, and its earnings per share stood at NT$5.30, up from NT$4.66.

In the first nine months of this year, TSMC's net profit rose 63.6 percent from a year earlier to NT$375.12 billion, with EPS of NT$14.47.

(By Chang Chien-chung and Frances Huang)

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