Usually in the second half of each year, particularly the third quarter, chip sales climb steeply on a sequential basis, to address the consumer market in the peak gift-giving winter season. But this year the economic impact of Covid-19 is set to create product supply overhangs that will nullify that.
However, TSMC is well placed to the endure any coming storm. The company announced revenue of NT$310.6 billion (about $10.3 billion) for the 1Q20, up 42 percent on 1Q19.
The company made a net profit of NT$117.0 (about $3.89 billion), compared with a net profit of NT$61.39 (about $2.04 billion) in the same quarter a year before, an increase of about 90 percent.
In the first quarter, shipments of 7nm accounted for 35 percent of total wafer revenue and 10nm process technology contributed 0.5 percent while 16nm accounted for 19 percent. Advanced technologies, defined as 16nm and more advanced technologies, accounted for 55 percent of total wafer revenue.
There are reports that idle capacity is increasing on TSMC's 28nm and 45nm wafer fabs.
The chart above, shown by TSMC at its analysts briefing, indicates that chips for datacenter applications are in strong demand but that smartphone, which represents nearly half TSMC's business continues to suffer.
"Our first quarter business declined less than seasonality, due to the increase in HPC-related demand and the continued ramp of 5G smartphones," said Wendell Huang, CFO of TSMC, in a statement. "Moving into second quarter 2020, we expect our revenue to be flattish, as weaker mobile product demand is expected to be balanced by continued 5G deployment and HPC-related product launches."
TSMC said it expects 2Q20 revenue to be between $10.1 billion and $10.4 billion, essentially flat with 1Q20 and below the usual seasonal climb.
Huang reportedly said that in the second half demand for electronics, including smartphones, would be hit by the Covid-19 pandemic but balanced by 5G infrastructure deployment.
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