TSMC sales surge ahead of new Apple iPhone launch

• Historically, the buildup prior to Apple’s new iPhone launch and holiday inventory would increase further TSMC’s business
• TSMC remains the bellwether for the industry because of its critical role in crafting silicon for everything from mobile devices to high-powered computers
• Although it had to halt shipments to Huawei Technologies due to the United States blacklisting of the Chinese company, demand from other clients remained high

Ahead of Apple’s upcoming iPhone launch, A-series chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), reported a 22% surge in quarterly sales.

According to Bloomberg’s calculations from TSMC’s monthly sales data, the latter saw revenue for the three months to September climb to a record NT$356.4 billion (US$12.4 billion), up from NT$293 billion a year earlier.

Apple is one of the chipmaker’s biggest customers and business will often increase in the months before Apple unveils new iPhones and the holiday season, amid solid and growing demand for chips for 5G, Internet of Things (IoT) and high-performance computing applications.

For the first nine months of the year, TSMC reported record accumulated sales of NT$977.722 billion, up 29.9% from a year earlier.

Reports suggest that TSMC is likely to receive a boost during the quarter as its second-largest customer Huawei Technologies raced to stockpile supplies before a US ban on shipments to the Chinese telecom giant came into effect last month. 

Meanwhile, rival chipmaker Samsung Electronics reported recent earnings that beat analyst estimates after it’s mobile and chip businesses benefited from the curbs on Huawei.

Concurrently, Taiwanese chipmakers United Microelectronics Corp. and MediaTek also reported strong sales, suggesting a broad recovery in the industry.

The computer chips made by TSMC aren’t just the brains inside smartphones, laptops, and video game consoles — they’re also core components of almost every kind of electronic equipment in the world, from that used in data centers to F-35 fighter jets. Along with nearly 500 others, Apple, Huawei, Sony, Qualcomm, Broadcom, and HiSilicon are all TSMC’s clients.

Leading companies like Huawei and Apple design but don’t actually manufacture their own chips unlike integrated device manufacturers, such as Intel and Samsung, which design and then make the chips used in their own products.

TSMC’s model is that of a dedicated “pure-play” foundry: it only operates on a contract basis and doesn’t sell devices of its own design. 

Over the last three decades, TSMC has invested in 18 state-of-the-art chipmaking facilities — called “fabs,” for “fabrication facility” — in Taiwan and today the firm accounts for more than half of the US$42 billion foundry segment of the semiconductor industry. In July this year, it raised its 2020 outlook, highlighting that revenue this year will grow by more than 20% in dollar terms. 

TSMC executives also affirmed plans to build a plant in Arizona, saying that the US administration and the state of Arizona closed the cost gap for building the fab. 

The company had previously said the $12 billion facilities will begin construction in 2021, with production targeted to begin in 2024. 

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