TSMC's strong October sales driven by Apple's orders: analyst

Taipei, Nov. 11 (CNA) Chip orders from American consumer electronics giant Apple Inc. were behind the vibrant monthly sales increase recorded by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in October, according to an analyst.

Apple, TSMC's largest client, has been using chips made on the Taiwanese company's most advanced 3 nanometer process, which went into commercial production at the end of last year, Shin Kong Investment Trust Co. Chairman Quincy Liu (劉坤錫) told CNA on Friday

On Friday, TSMC reported October consolidated sales of NT$243.20 billion (US$7.53 billion), up 34.8 percent from the previous month and 15.7 percent from a year earlier.

The October figure beat the contract chipmaker's previous monthly record of NT$222.71 billion, which was reported in November 2022, according to TSMC data.

Liu said Apple's newest iPhone 15 Pro and iPhone 15 Pro Max, which were launched in September, are powered by the latest A17 Pro GPU that uses TSMC's 3nm technology. The new six-core GPU is about 20 percent faster than its predecessor, the A16 Bionic.

In addition, Apple's latest MacBook Pro laptop and iMac desktop models use the family of M3 chips, which is also made on TSMC's 3nm technology, Liu said. The M3 processor is the "base" version of the new Apple Silicon line and is about 65 percent faster than the original M1 chip.

The strong demand for chips made on the 3nm process helped push the sharp increase in October sales for TSMC, the world's largest contract chipmaker, according to Liu.

In addition, he said, American smartphone IC designer Qualcomm Inc. and its Taiwanese counterpart MediaTek Inc. have launched their latest 5G chips -- the Snapdragon 8 Gen 3 and the Dimensity -- respectively, that both use TSMC's 4nm processor, thus adding momentum to the chipmaker's sales growth in October.

At an investor conference on Oct. 19, TSMC CEO C.C. Wei (魏哲家) said the growing demand for the sophisticated 3nm technology was expected to continue into 2024, and the company was likely to maintain its growth momentum.

In the third quarter of this year, 3nm chips accounted for 6 percent of TSMC's total sales, 5nm chips made up 37 percent, and 7nm chips 16 percent, which meant that the advanced technologies accounted for 59 percent of the company's total revenue.

Meanwhile, TSMC is scheduled to start mass production of its 2nm process in 2025, which is expected to further cement the chipmaker's lead over its peers in terms of high-end technology development.

In the first 10 months of this year, TSMC recorded consolidated sales of NT$1.78 trillion, down 3.7 percent from a year earlier, which it said reflected weak global demand.

TSMC has forecast fourth-quarter consolidated sales of between US$18.8 billion and US$19.6 billion, with a median figure of US$19.2 billion that will represent an 11.1 percent sequential increase.

The forecast was based on an exchange rate of NT$32 to one U.S. dollar. In Taiwan dollar terms, the chipmaker's consolidated sales between October and December are expected to range between NT$601.6 and NT$627.2 billion.

TSMC's fourth quarter guidance indicates that its November and December revenue may be lower than its significant October sales, analysts said.

The strong showing in October might provide support for TSMC shares in the near future, but the stock's movement will still depend on the performance of the global markets, Liu said.

On Friday, shares of TSMC appeared resilient, ending unchanged at NT$557.00 and outperforming the Taiex, the weighted index on the Taiwan Stock Exchange, which finished down 0.38 percent, at 16,682.67.

The company's October sales report was released after the stock market closed.