TSMC Posts Fourth Quarter Revenue and Profit Jump Beating Forecasts


Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE:TSM), reported a 16.1% rise in fourth-quarter profit on Jan. 16 as its customers continued to demand new, faster silicon for next-generation smartphones. 

The company said its revenue came in at $10.5 billion with income at $3.8 billion. This jump in revenue reflects a 10.6% quarter-over-quarter rise. TSMC's profit was well past analysts' expectations of $3.7 billion. Gross margin for the quarter was 50.2%, operating margin was 39.2%, and net profit margin was 36.6%.

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TSMC said that in the fourth quarter, shipments of 7nm silicon accounted for 35% of total wafer revenue and 10nm process technology contributed 1%, while 16-nm accounted for 20%. According to reports from Taiwan, AMD (NASDAQ:AMD) is said to be buying 20% of TSMC's 7nm capacity. 

As Wccftech recently reported, Bloomberg's Charles Shum believed that for its fourth quarter of fiscal and calendar year 2019, TSMC will post $10.2 billion in revenue and gross margins that exceed those that it touched during the year's first three quarters and since 2018. Given the strength of TSMC's operations, which are well past its peers, Shum's estimate came up short.

TSMC rivals United Microelectronics (UMC) and Vanguard International Semiconductor (VIS) aren't experiencing the same success. According to filings by the respective companies, they both saw a drop of 2% in revenue on-year. Other semiconductor companies like Samsung and SK Hynix are seeing their stock buoyed by prospects of a drawdown in the trade war.

TSMC recently reported its yearly revenue for 2019, coming in at $35.7 billion. It expects 2020 to be a high-growth year with a 15-20% jump in revenue expected on the back of a new 5nm process node and the mass adoption of 5G devices. Earlier in 2019, TSMC announced it is accelerating its spending accordingly, hiked its estimate for 2019 capital expenditure to $14 billion to $15 billion from $11 billion previously.

While the smartphone market has been fairly stagnant during the past few years, IDC sees global smartphone shipments topping 1.4 billion units in 2020, up 1.5% on year thanks to increased demand from 5G.

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The company is expecting a slow first quarter, the traditional slow season for the global semiconductor industry, and sales are likely to be stable or slightly lower than the fourth quarter of last year.

According to 13F filings reviewed by Wccftech, fund managers generally have a positive view of TSMC. Per the most recent data reported, on December 31 six funds increased their holdings of TSMC's stock. Between these six firms, they purchased 898,297 shares with a market value of $51 million.

TSMC's stock is currently at 334.50 TWD ($11.17 USD) on the Taipei exchange, down 1.62%, while its ADR in New York is currently at $58.39 and was down 3% during the trading day.

The stock is up 51% on-year in Taiwan, while the TAIEX itself is up 24%.