According to Japanese media, the recovery trend in the global semiconductor industry is becoming increasingly evident. Taiwan Semiconductor Manufacturing Company (TSMC) announced on October 17 that its operating profit for the third quarter of 2019 has increased for the first time in five quarters, with a year-on-year growth of 13%. The semiconductor orders from Apple’s new smartphone and the new generation of communication standard 5G are very promising, prompting TSMC to significantly raise its equipment investment expectations. The recovery trend is expected to expand across the entire industry. After about a year and a half of downturn, the semiconductor industry is reaching a turning point.
According to a report from the Nikkei on October 18, TSMC President C.C. Wei stated at a press conference on October 17 that he did not anticipate the enormous demand for 5G semiconductors.
The report indicated that TSMC’s sales in the third quarter amounted to NT$293 billion (approximately RMB 68 billion), with a net profit of NT$101 billion, both achieving double-digit growth (around 13%) year-on-year. The growth rate of net profit far exceeded the average forecast from analysts at Refinitiv.
The report suggests that the semiconductor market hit bottom in the first quarter, and the recovery trend is becoming increasingly clear. Wei expressed confidence in the future development prospects. The basis for this is that 5G will officially launch worldwide starting in 2020, and semiconductor demand is expected to increase.
In fact, TSMC’s factories producing cutting-edge products such as 5G semiconductors are already operating at full capacity and will significantly increase production in the future. Compared to the data released in July, TSMC has significantly raised its equipment investment expectations for 2019. The annual equipment investment amount is expected to be around $14 to $15 billion, setting a new historical high.
According to reports, the increase in semiconductor orders for 5G base stations from companies like Huawei has led to a strong demand for TSMC to accelerate the production of high-performance semiconductors that handle large communication data in base stations. Orders for 7nm process high-performance semiconductors are already at saturation. Next year will see a surge in new 5G smartphone products, and semiconductor demand is expected to further increase.
The report describes that TSMC is responsible for the production of semiconductors that handle computational processing, which are used in various devices including Apple’s smartphones and networks. These semiconductors are known as the “infrastructure of the IT industry” and are considered a leading indicator of high-tech prospects, attracting the attention of domestic and foreign investors.
Article edited by | Ping Yue
WeChat editor | Li Sai
WeChat reviewer | Tian Xin
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