Taiwan Semiconductor reports 3Q beat as Apple chip maker raises 4Q sales target and shrugs off Trump's trade war

Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM) reported on Thursday a slight beat in third-quarter revenue and raised its guidance for the fourth quarter covering the Christmas holiday season as the company seemingly set aside the impact of US President Donald Trump’s trade war against China.

TSMC, the top supplier of the A13 chips used in the latest pricey smartphones of Apple Inc (NASDAQ:AAPL), said third-quarter revenue came in at US$8.49 billion, a touch higher than the consensus of $8.4 billion and the year-ago level of US$8.32 billion.

“Despite the current market uncertainties, our business will benefit from a continued steep ramp (up) of 7 nanometer for several high-end smartphones,” Chief Financial Officer Lora Ho said in the company’s earnings conference call.

The 7 nanometer technology is used to manufacture those A13 chips.

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TSMC forecast fourth-quarter revenue of US$9.35 billion to US$9.45 billion presumably due to robust demand for Apple‘s smartphones, sharply up from the same period last year of US$9.21 billion. The year-end is a key period for companies such as TSMC because of heavy sales during the Christmas/New Year holiday shopping season.

That season then spills over into late January or early February during the height of Lunar New Year festivities in China, Apple’s second-biggest market after the US.

Shares of TSMC in Taiwan slipped 0.84% to T$236.50. In New York, the shares were trading up 0.08% to US$39.60, having closed 1.1% lower at US$39.57 on Wednesday.

Ho said the strength of demand for their chips “will be partially offset by continued weakness in cryptocurrency mining demand and inventory management by customers.” 

From a geographic perspective, TSMC said revenue from customers based in North America accounted for 62% of total net revenue, while revenue from the Asia Pacific, China, EMEA (Europe, Middle East, and Africa) and Japan accounted for 10%, 16%, 5%, and 7% of total net revenue respectively.

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Citing Digitimes, a port by Apple Insider said TSMC will fulfill all “A13″ orders, and will likely help the company increase its market share in chip production for the high-end technology.

After acquiring a market share of 56% in the “global pure-play foundry market” in the first half of 2018, in part due to the A12, the Apple orders are thought by report sources to help propel the share to 60 percent next year, the report said.

TSMC continues to be a major supplier despite reported efforts by Samsung to become one of Apple’s A-series suppliers once again.

Samsung was once the exclusive A-series manufacturer, but as competition and legal battles between the South Korean conglomerate and Apple intensified, orders migrated over to TSMC, who now enjoys the monopoly of supply for Apple.

TSMC is based in Taiwan.

Reporting by Rene Pastor, contactable on [email protected]

Story by ProactiveInvestors