(Bloomberg) -- Taiwan Semiconductor Manufacturing Co. reported a stronger-than-expected 36% increase in profit, buoyed by orders from its largest customers including Apple Inc. ahead of new iPhone shipments to consumers.The world’s largest contract chipmaker saw net income for the three months to September rise to an all-time high of NT$137.3 billion ($4.8 billion), versus the average analyst estimate of NT$126 billion.
Previously disclosed monthly numbers showed sales climbed to a record NT$356.4 billion in the quarter, suggesting that Apple’s main iPhone chipmaker is benefiting from a gradual recovery in the global economy. The company’s business typically kicks into high gear in the months before Apple unveils its new phones and the holiday season. It also received a boost during the quarter as second-largest customer Huawei Technologies Co. raced to stockpile supplies before a U.S. ban on shipments to the Chinese telecom giant came into effect last month.
On Tuesday, Apple unveiled its latest iPhone lineup, saying two new models will come out on Oct. 23 while two other models will arrive three weeks later. The Cupertino, California-based company expects to build at least 75 million new 5G iPhones this year, roughly in line with its previous flagship launch, Bloomberg News has reported.
“Increasing semiconductor content from 5G smartphones, continuous AMD CPU market-share gain, Apple silicon, and CMOS image sensors should continue to drive upside in 2021 and beyond,” Citigroup analysts Roland Shu and Grant Chi wrote in a research note.
TSMC said in July that revenue this year will grow by more than 20% in dollar terms and increased its 2020 capital expenditure target by about $1 billion to between $16 billion to $17 billion, in anticipation of strong demand for 5G and high performance computing-related applications over the next few years.
TSMC shed 1.3% on Thursday in Taipei ahead of the earnings. The shares have surged roughly 83% from their March lows amid signs that the company is bouncing back from the worst of the coronavirus-induced disruptions.
What Bloomberg Intelligence Says
Taiwan Semiconductor Manufacturing’s 3Q sales of NT$356 billion, despite a strengthening New Taiwan dollar, is 5% above company guidance. This may be driven by stronger-than-expected 5-nanometer A14 chipset orders from Apple and mature-node chips, in addition to rush orders from Huawei. It also implies that TSMC’s 3Q operating profit may beat consensus by more than 11%, by our calculations, assuming an operating margin of 41%.
- Charles Shum and Simon Chan, analysts
Read the research here.
©2020 Bloomberg L.P.
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