The announcement of iPhone 7 and iPhone 7 Plus could not have come at a better time for TSMC. With record profits added, not to mention the surge in share prices, this sudden growth has also attracted more investors for the prospect of future chip orders.
TSMC Climbed to Its Highest Level in 2016 But Some Analysts Are Wary About the Situation
TSMC currently has a current market value of $156 billion and accounts for 16 percent of Taiwan's entire equity market value. Thanks to the level of orders that the manufacturer has received from Apple for its A10 Fusion SoC, the share price has surged 32 percent, making it the highest climb ever. However, some analysts are being careful about this growth.
Sandy Mehta, Chief Executive Officer of Value Investment states the following:
“Samsung's issues and the perceived benefit for Apple is surely creating some optimism. TSMC is the best in class. Valuations are not very high for TSMC, and rising estimates have led to investor optimism. The shares could still have upside.”
Data compiled by Bloomberg suggest that the company's net income will increase 30 percent this quarter. As for profit, it reportedly climbed 28 percent in the previous three months to $3.1 billion from a year earlier.
Mark Li, a strategist at Sanford C. Bernstein believes that demand from just a single phone maker could have dire consequences because of the reduce growth of the actual smartphone market.
“A lot of demand is coming from one single device and any hiccup on iPhone sales this and next year could have a big impact on TSMC. Longer-term smartphone growth will deteriorate gradually, which is a headwind to the company.”
In addition to securing A10 Fusion chipset orders, TSMC has reportedly secured 100 percent of all A11 orders, which is going to be present in iPhone 8. Apple’s iPhone 8 is said to arrive in a total of three models, including one that features a 5-inch display. A11 itself is going to be manufactured on the 10nm FinFET process, but with Samsung having already announced mass production of SoCs on the same node, the competition is going to get tougher in the future.