Author: Times Finance Wang Liang
Image source: Visual China
On July 16, TSMC released its second quarter financial report for the 2020 fiscal year ended June 30. Compared with the first quarter, its performance in the second quarter was basically the same.
financial report shows that in the second quarter, TSMC 's revenue was NT$310.699 billion (about RMB 73.73 billion), a year-on-year increase of 28.9%, basically the same month-on-month period compared with the previous fiscal quarter; net profit was NT$120.822 billion (about RMB 28.67 billion), a year-on-year increase of 81%, a month-on-month increase of 3.3%, and a net profit margin of 38.9%; among them, revenue in June reached NT$120.878 billion (about RMB 28.68 billion), a year-on-year increase of 28.8% compared with May and a year-on-year increase of 40.8%. This is the 13 consecutive months of revenue growth in TSMC 's revenue since June 2019.
TSMC vice president and chief financial officer Huang Wende said that the company's performance in the second quarter was that the continued deployment of 5G infrastructure and the launch of high-performance computing-related products offset the decline in sales of other platforms' products.
For the future, Huang Wende said that in the third quarter, driven by 5G smartphones, high-performance PCs and information technology-related applications, TSMC 's industry-leading 5nm and 7nm technologies will be supported by strong demand.
In addition, the new regulations on Huawei restrictions announced by the U.S. Department of Commerce on May 15 will officially take effect on September 15. Regarding this matter, at the TSMC shareholders' meeting in June, Liu Deyin, chairman of TSMC , said that if there is no HiSilicon order, whether in terms of production capacity, orders or mobile phone market share, many customers want to fill the gap, but they don’t know how long it will take to fill it. It depends on the industrial connectivity and industrial agility. He admitted that he hoped that this would not happen, but if it happened, he hoped that it would be repaired soon.
At the second quarter financial report performance briefing, TSMC finally made it clear that the company does not plan to continue supplying Huawei after September 14. Liu Deyin said that TSMC can only be supplied to Huawei through direct shipment, and Huawei may purchase third-party chips for its smartphones.
As of July 16, Eastern Time, the latest stock price of TSMC was US$66.06 per share, with a total market value of US$342.592 billion. Compared with SMIC A shares, with a total market value of RMB 613.757 billion, TSMC is still leading several positions.
7nm becomes the main source of revenue, 5nm will focus on
The latest statistics from Japanese media show that TSMC is currently the world's largest wafer foundry, with a market share of 51.5% in the second quarter, ranking first. Samsung ranked second with a share of 18.8%. GM, UMC and SMIC ranked 3-5 respectively.
According to the second quarter financial report, judging from the revenue contributed by various processes of TSMC , the 16nm and 7nm processes are still the main sources of revenue. The 16nm process contributed 18% of the revenue in the second quarter, and the 7nm process contributed 36%. These two items contributed 54% of the revenue in total. 28nm is another process with revenue of more than 10%, accounting for 14% of revenue in the second quarter.
is divided into products, smartphone chips are still the main source of revenue, accounting for as much as 47%, high-performance computer chips contribute 33% of revenue, Internet of Things chips are 8%, automotive chips are 4%, digital consumer electronics chips are 5%, and others are 3%.
is calculated in US dollars. TSMC said in its performance meeting that it expects revenue in the third quarter to be between US$11.2 billion and US$11.5 billion, gross profit margin will continue to remain between 50% and 52%, and operating profit margin will be between 39% and 41%. TSMC also raised its outlook for sales growth in 2020, with sales increasing by more than 20% in 2020. It is expected that the 5nm process will contribute 8% of revenue to TSMC in 2020, and its capital expenditure expectations in 2020 are also raised to US$16 billion to US$17 billion.
Previously, according to media reports, TSMC was ready to mass-produce the latest Apple A14 processor , and the A14 processor will use TSMC 's 5nm process.
Tianfeng Securities Research Report Analysis believes that the mass production of Apple A series processors usually begins 4 to 5 months before the release of the new iPhone every year. The 5nm process is currently the most advanced process in the industry. TSMC has only been mass-produced on a large scale this year. It is a brand new process. When other processes are produced at full capacity, the large-scale mass production of the new process will also increase the revenue of TSMC on a large scale.
However, it is worth mentioning that the media has previously reported that Huawei and Apple next-generation flagship smartphone chips will adopt the TSMC 5nm process. During the first quarter financial report analyst conference call on April 16, Wei Zhejia, CEO of TSMC, revealed that the 5nm process has been mass-produced on a large scale. However, in this quarter's financial report, TSMC has not disclosed the revenue brought by the 5nm process.
In addition, on July 3, TSMC issued an announcement stating that it will issue the fourth unsecured corporate bond this year, with a total issuance of NT$13.9 billion, and the funds will be used to build new and expand factory equipment. In the first half of this year, TSMC has issued 60 billion yuan of unsecured corporate bonds.
Previously, TSMC has been continuously expanding its production capacity. Tianfeng Securities Research Report believes that the expansion of its production capacity and R&D investment indicate that TSMC is expected to further increase revenue and profits. Under the influence of the epidemic, its revenue has increased significantly against the trend. Its revenue may be related to the Apple iPhone 12 this fall, which is equipped with the A14 processor with 5nm process.
will no longer continue to supply Huawei after September 14
Huawei is the second largest customer of TSMC except Apple . According to TSMC 2019 financial report, its largest customer Apple contributed revenue last year NT$247.213 billion, accounting for 23%, a year-on-year increase of only 1%. Huawei contributed NT$152.9 billion last year to it, accounting for 14%, making it its second largest customer, with a year-on-year increase of more than 80%.
On July 12, before the release of the second quarter financial report, Tianfeng Securities' research report analyzed that TSMC still has two risks. One is that downstream demand is unclear under the epidemic. Although Apple will release iPhone 12 in the second half of the year, due to uncertainty in its sales, weak downstream sales may affect TSMC 's revenue and profit in the second half of the year.
The second is TSMC suspends Huawei's advanced process orders for the fourth quarter. Although Liu Deyin said that TSMC can fill the gap in Huawei's orders, Huawei, as the second largest customer of TSMC , canceling cooperation with Huawei will have an uncertain impact on the company's revenue.
. According to Taiwan media reports, TSMC has opened the advanced process capacity of Huawei HiSilicon's original fourth quarter to other customers, including Apple , Qualcomm , MediaTek , AMD, etc., have significantly added 7nm orders for the fourth quarter to TSMC , the 7nm production capacity will remain full load, and the 5nm utilization rate will also remain high.
. According to supply chain information, the A14 processor of Apple iPhone 12 will take up about 120,000 to 130,000 pieces of TSMC 5nm production capacity in the fourth quarter, and intends to obtain the 5nm production capacity originally booked by Huawei HiSilicon.
Taiwan media also said that TSMC 's fourth-quarter revenue is expected to be the same as the third quarter. Although it lost Huawei HiSilicon orders, it has little impact on operations. The goal of US dollar revenue growing by 15% to 18% over last year will be successfully achieved.
At the financial report performance briefing, TSMC also revealed that its 3nm process is expected to be mass-produced in 2021 and mass-produced in the second half of 2022. Compared with the 5nm process, 3nm will bring a 70% density increase, a 10%-15% rate gain and a 20-25% power increase compared to the 5nm process.
TSMC said it will also sprint for more advanced processes, and has made major breakthroughs in 2nm R&D, and has successfully found a path. It will enter the gate-all-around technology and move towards another new technology node after developing fin field-effect transistors (FinFETs) for TSMC to achieve an absolute global leading position.
Liu Deyin said that TSMC is cooperating with customers to increase production capacity. The new U.S. chip factory will begin production in 2024, and the U.S. has pledged to close the cost gap for TSMC in new U.S. factories.
latest news also shows that while TSMC is sprinting to the advanced manufacturing process, it is simultaneously increasing investment in advanced packaging, and supporting equipment and material manufacturers such as Hongsu, Jingte, Wanrun and Wangsi, to build a complete ecosystem to bind orders of major customers such as Apple .
Previously, according to Taiwan media reports, TSMC believes that after entering the 5G era, many high-speed computing and on-board chips require advanced processes below 5nm. Even smartphones integrate chips with powerful functions such as AI and medical diagnosis, and use advanced packaging technology to stack them with other different chips, allowing Moore's Law to extend.
TSMC expects the demand for 5G smartphones to continue to grow in 2020, and the company's business will receive support from the development of 5G and advanced chips. In addition, according to foreign media reports, people from the industry chain revealed that TSMC has expected that Apple Mac processor OEM orders based on ARM architecture will increase significantly in the second half of 2021, which will also improve their performance.
