TSMC Predicted To Significantly Grow Revenue This Quarter

Ramish Zafar

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

Taiwanese semiconductor fabrication company TSMC is one of the handful of corporations that have managed to breeze past this year's post-pandemic virus disruption. TSMC, which is responsible for fulfilling the processor supply needs of companies such as Apple and AMD, has made a name for itself through its leading-edge processor fabrication nodes. Its 7nm manufacturing processes have provided AMD with a serious leg up over chip behemoth Intel Corporation, and its next-generation 5nm node is expected to give Apple's upcoming iPhones a serious competitive advantage over their competitors.

Now, as we enter into the end of this year's third quarter, analysts are starting to present their estimates of TSMC's revenue. These estimates fall in line with what the firm provided in its guidance for the quarter in July and sit smack in the middle of TSMC's estimated range.

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The estimate is reported by Chinese publication TechWeb and it predicts that the company will grow its revenues both year-over-year and sequentially. During the second quarter of 2020, TSMC earned $10.4 billion in revenue and in the third quarter of 2019, it posted $9.4 billion in revenue. Subsequently, the estimate shared by TechWeb speculates that at the end of this quarter, the Taiwanese firm will have grown revenue by 10% sequentially and 20% year-over-year.

Additionally, the figure also sits at the midpoint of TSMC's self-stated revenue guidance for the quarter. In its presentation material for the earnings report of Q2 2020, the company stated that it expected to earn between $11.2 billion and $11.4 billion in the upcoming quarter, with revenue for the full year expected to grow by 20% over 2019. TSMC expects revenues from its 7nm and 5nm nodes to drive this growth, with high-performance computing (HPC) and 5G smartphones expected to utilize the company's products.

TSMC'S revenue guidance for the current quarter from its earnings presentation released in July. Image: TSMC

In the earnings call that followed the financial results this July, TSMC's management team also provided updates on its manufacturing technologies. The fab hopes that its N5 processing node (which covers 5nm products) will make up for roughly 8% of its revenue for this year, and its N4 node that will use manufacturing technologies similar to the N5 to enter production in 2022. Through achieving this, TSMC expects that the 5nm technology will continue to contribute to its revenues for the course of the next several years.

This contribution should play a critical role in enabling the company's success over the long term, since progressing beyond 5nm requires extensive research and capital investments which should take longer to materialize than the investments for their predecessors did. N4 will improve performance-per-dollar, explained TSMC, and it will be succeeded by the N3 node - which will mark the fab's next manufacturing technology process evaluation following N5.

The N3 node will provide up to 1.7x transistor density over N5, in what will mark TSMC's strongest manufacturing process to date. Semiconductors fabricated through TSMC's 5nm process node are capable of achieving densities of 1.73 million transistors-per-mm² and exceeding these will provide processors manufactured on the N3 node with a serious performance advantage in the industry.

The node will also provide a performance gain ranging between 10% to 15% and a power efficiency gain ranging between 25% to 30% over N5, and TSMC expects it to enter risk production in 2021 with volume production to follow next year.

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