TSMC forecasts 2020 sales growth at over 17%

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TSMC CEO C.C. Wei (left) and Chairman Mark Liu

TSMC CEO C.C. Wei (left) and Chairman Mark Liu (CNA photo)

Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, said on Thursday that its consolidated sales for 2020 will grow more than 17 percent from a year earlier in 2020.

In an investors conference, which was watched closely by the equity markets at home and abroad, C.C. Wei (魏哲家), TSMC's chief executive officer, said the company is expected to benefit from solid demand for smartphones, high performance computer devices, the Internet of Things related applications and automotive electronics this year.

Wei said he expects TSMC's advanced 7 nanometer process, the latest technology which the chipmaker has begun mass producing, will continue to make a big contribution to the company's sales by accounting for more than 30 percent of the total revenue for 2020.

TSMC is scheduled to launch mass production of the more sophisticated 5nm process in the first half of this year. Wei said the 5nm is expected to make up about 10 percent of the company's total sales for 2020.

He said while the global pure foundry industry is estimated to see sales rising 17 percent in 2020, TSMC is expected to perform better and surpass the growth of the entire pure foundry industry by "several percentage points."

Excluding memory chip sales, the global semiconductor industry is expected to post a year-on-year increase in sales of around 8 percent in 2020, Wei said.

Before Wei spoke, TSMC released its latest earnings results which showed net profit for the October-December period was NT$116.04 billion (US$3.87 billion), the highest quarterly level in the company's history, up 14.8 percent from a quarter earlier and also up 16.1 percent from a year earlier.

TSMC's record high net profit had been widely expected after the chipmaker posted a new high of NT$317.24 billion in consolidated sales for the fourth quarter, up 8.3 percent from the previous quarter and also up 9.5 percent from a year earlier.

TSMC's fourth quarter earnings per share (EPS) stood at NT$4.47, compared with NT$3.90 in the third quarter and NT$3.86 recorded over the same period of the previous year.

For 2019, TSMC's net profit stood at NT$345.26 billion, down 1.7 percent from a year earlier, with EPS at NT$13.32, compared with NT$13.54 the previous year, while consolidated sales rose 3.7 percent from 2018 to NT$1.07 trillion.

TSMC said due to expected strong demand for 5G smartphones, the company is expected to see a mitigation in slow season effects in the first quarter, estimating its sales for the January-March period will fall only 1.3 percent from a quarter earlier to range between US$10.2 billion and US$10.3 billion.

Its gross margin -- the difference between revenue and cost of goods sold -- for the first quarter is expected to range between 48.5 percent and 50.5 percent, compared with 50.2 percent in the previous quarter, TSMC said.

The chipmaker said its operating margin -- the difference between sales, the cost of goods sold and operating expenses -- for the January-March period is expected to range between 37.5 percent and 39.5 percent, compared with 39.2 percent a quarter earlier.

To meet rising demand from its clients, TSMC said, its capital expenditure for 2020 is expected to range between US$15 billion and US$16 billion, the highest level for the company.

TSMC said it will assign 80 percent of the capex to develop the 3nm, 5nm and 7nm technology, 10 percent of the spending in advanced packaging and testing technology development and 10 percent in special process development.

The 3nm process is expected to begin commercial production in 2022.