TSMC announced its third-quarter 2020 (Q3) financial report on Thursday. According to the financial report, TSMC’s Q3 net profit was NT$137.3 billion (approximately $4.8 billion), an increase of 36% relative to the same period last year. This is much higher than the average analyst’s estimate of NT$124.9 billion (approximately $4.35 billion). This is also the quarter with the highest net profit in TSMC’s history.
Previously disclosed monthly data shows that TSMC’s third-quarter sales climbed to a record NT$356.4 billion (approximately $12.4 billion), which was also higher than the previous estimate of $11.2 billion to $11.5 billion. The profit of the world’s largest foundry chip maker has soared mainly due to the strong demand for products that require high-end chips, and the preparation of new mobile phones by major customers such as Apple and Huawei.
TSMC’s business usually enters a rapid development stage a few months before Apple’s new mobile phone and holiday shopping season. In addition, the company’s performance was also boosted this quarter due to the large stock of chips by Huawei, its second-largest customer.
TSMC’s Q3 net profit is massive
On Tuesday, Apple released the latest iPhone series, equipped with the A14 chip. The two new models will be available on October 23, and the other two will be available in three weeks. According to reports, Apple expects to produce at least 75 million new 5G iPhones this year. This is roughly the same as the flagship phones previously released.
Citigroup analysts said: “5G smartphone semiconductor components increase, AMD CPU market share continues to grow, Apple silicon and CMOS image sensors in 2021 and beyond should continue to promote the rise.”
TSMC said that its revenue will grow by more than 20%, and it will increase its 2020 capital expenditure. Its target will increase by about $1 billion dollars to between $16 billion and $17 billion U.S. dollars. It also expects 5G and high-performance demand for computing-related applications to be strong.
Before the earnings report, TSMC’s stock price fell by 1.3% on Thursday. The company’s share price has soared about 83% from its low in March. In addition, its market value has reached $414 billion. There are signs that the company is rebounding from the coronavirus pandemic.
With Huawei now out of TSMC’s supply chain, we expect a significant fall in its net profit for Q4 2020. Of course, TSMC will replace the vacuum which Huawei leaves but it may not get as much as Huawei’s orders.