Text/Qiuzi Review/Ziyang Correction/Zhiqiu
Due to the change of chip rules, TSMC completely disconnected from Huawei. You should know that at its peak, Huawei was TSMC's second largest customer and contributed considerable business income.
However, in the face of losing the second largest customer, TSMC Chairman Liu Deyin made it clear that Huawei's orders will not have much impact on TSMC.
TSMC's revenue hit a new high
. In mid-2021, TSMC confirmed Liu Deyin's judgment with its revenue results. Previously, TSMC announced its full-year operating income in 2021. Data showed that the company's total operating income in 2021 reached US$56.82 billion, an increase of 24.9% compared with the same period in 2020.
It can be seen that even after losing Huawei, its big customer, its revenue performance has shown a growth trend.
So, does this mean that Huawei orders are not important to TSMC?
In my opinion, Huawei orders are extremely important to TSMC, but the high operating income covers Huawei's role in TSMC's customer system.
Before analyzing the impact of losing Huawei orders on TSMC, the author first analyzed the reasons why TSMC's revenue hit a new high. As we all know, the entire manufacturing industry has been accompanied by chip shortage in 2021. Against this background, the production capacity of various processes of Taiwan is in full capacity, and chip orders are constantly pouring into TSMC's hands. It is reasonable that its revenue hits a new high in 2021.
Of course, the market environment is only one of the reasons why TSMC's operating income hits a new high, while on the other hand, the advantages of advanced processes play a role.
According to the revenue ratio contributed by each process node announced by TSMC, 5nm and 7nm account for the majority, with a revenue ratio of 50%.
You should know that the main advantage of advanced processes is that the price of OEM is much higher than that of mature processes. In other words, the net profit provided is also higher.
lost Huawei orders, three major problems occurred
Behind TSMC's high operating income, three major problems also arise one after another:
First of all, over-reliance on a single manufacturer;
When TSMC announced the rise in OEM prices last year, it "opened the back door" for Apple. This is more intuitive to show that after losing Huawei orders, TSMC faced the crisis of over-reliance on a single customer.
data shows that only Apple, the US company, contributed a quarter of TSMC's operating income. If other US companies are included, almost 80% of TSMC's total production capacity is taken over by US companies.
Once Apple or other US companies transfer orders to Samsung, it will inevitably be a heavy blow to TSMC, especially after losing Huawei orders, there are not many companies around the world that can help TSMC fill the order gap in US companies.
Secondly, it loses its independent pricing power;
TSMC provides Apple with more preferential OEM prices, which once again reflects its loss of its independent pricing power . After all, Apple's orders are extremely large. If TSMC prices at will, unexpected consequences may occur.
It is more worth mentioning that the US also requires TSMC to hand over various core data such as customers, orders, inventory, etc., indicating that TSMC's autonomy may not be in its own hands.
To put it bluntly, TSMC cannot exercise more rights in front of many American companies' customers, and even depends on the eyes of American companies.
If TSMC and Huawei are still cooperating, with the help of MediaTek, it will not be a situation where US companies dominate the market in terms of customers.
Finally, the production cost of advanced chips has been slowed down;
As we all know, Huawei is also one of the main contenders for TSMC's advanced chip production capacity, but after losing Huawei's orders, the development of TSMC's advanced process chips is uneven, and it is impossible to obtain more advanced process chip orders to achieve the goal of reducing costs.
The most important thing is that if TSMC still holds Huawei orders, then in 2021, its operating income will not only be 365.8 billion, but it is not impossible to break through to 400 billion.
From the above point of view, the importance of Huawei orders to TSMC is self-evident. Although Liu Deyin said that Huawei orders will not affect TSMC, this is undoubtedly deceiving oneself. Various situations show that the crisis faced by TSMC is even more serious than expected. In the future, TSMC will become the "monetary foundry" of US companies and completely lose control.
Therefore, TSMC should consider how to reduce its dependence on US companies, and the right to speak in OEM is completely in its own hands.
to the end
As for the current global chip foundry market, Samsung and Intel are fully committed to developing their foundry business, which is not bad news for TSMC, because Samsung and Intel can attract the attention of US companies and reduce the concentration of US companies in TSMC's customer base.
It is undeniable that Samsung and Intel may affect TSMC's operating income, but the author believes that corporate autonomy is more important.
In short, if TSMC wants to develop in the field of foundry for a long time, it must overcome various difficulties.
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