Taiwan Semiconductor Manufacturing Company (TSMC) is likely to score record profits for 2018 as the company will be gradually ramping up volume production of 7nm process in the second half of the year to fulfill lucrative orders from Apple for fabricating A12 application processors for its 2018 new iPhone models and from Quacomm for processing its new-generation smartphone chips, according to industry sources.
The sources said that TSMC will see its revenue ratio for advanced 7nm process hit a high of 20% in 2018, and may therefore post better-than-projected revenues and profits for the second half of the year and register an annual revenue growth of over 10%.
This is despite TSMC having lowered its revenue growth forecast for 2018 to 10% from the earlier projection of 10-15%, citing weaker-than-expected smartphone demand in the second quarter and growing uncertainty facing the cryptocurrency mining market.
Supply chain sources cited MediaTek's lackluster performance in capturing orders for its latest AI-based Helio P60 SoCs from China smartphone vendors in the second quarter as another factor driving TSMC to revise downward its revenue growth projections for the year
MediaTek factor
Earlier, MediaTek was optimistic that its gross margin and revenues would pick up drastically starting in the second quarter of 2018, as China smartphone vendors including Xiaomi, Oppo and Vivo had claimed to mass adopt MediaTek's Helio 60 chips, prompting the design house to book a foundry capacity of over 30,000 wafers fabricated using TSMC's 12nm process.
Nevertheless, as Qualcomm has decided to roll out its new-generation Snapdragon700 series processors with built-in AI capabilities at highly competitive pricing ahead of schedule in May, China smartphone vendors have reportedly significantly cut their orders with MediaTek before turning to Qualcomm for the supply of AI-based processors, the sources said.
Qualcomm has grabbed large chip orders from non-Apple smartphone vendors and will have TSMC fabricate them in the second half of the year, and the foundry giant is also about to start fulfilling orders for fabricating A12 processors on 7nm node. Accordingly, TSMC's revenue ratio for the smartphone segment is likely to hit a high of 40% in 2018, the sources indicated.
Meanwhile, TSMC will see another 40% of its annual revenues for the year come from the high-performance computing chips segment. Despite a slowed growth in demand from the cryptocurrency mining market, TSMC is also poised to embrace strong demand from the gaming market as its major client Nvidia will soon unveil its new-generation GPU platform. Other top-five clients including Broadcom and Huawei Hisilicon are also queuing for foundry capacities at TSMC. All these make TSMC stand a good chance of posting an annual revenue growth of over 10% for 2018, the sources said. |