On April 16, TSMC, a well-known wafer foundry, announced its first-quarter financial results. Both revenue and gross profit margin exceeded expectations. Among them, consolidated revenue was $10.31 billion, a year-on-year increase of 45.2%; The previous quarter’s US$10.394 billion fell by 0.8% month-on-month; in terms of net profit, it was US$3.884 billion, an increase of 90.91% compared with US$1.992 billion in the same period of the previous year; US$3.5 billion, much higher than US$2.932 billion in the same period of the previous year, and an increase from US$5.216 billion in the previous quarter.
(TSMC announced the results of the first quarter financial report – the data comes from the official website of TSMC)
5G picks up, TSMC is firmly on top of the top ten global wafer foundries in 2020 Q1
Affected by the epidemic, the business of many semiconductor manufacturers around the world has suffered a lot. However, the impact of the epidemic on TSMC seems to be minimal, and it is not obvious in the financial report.
According to Huang Wende, vice president and chief financial officer of TSMC, the market growth of products such as 5G smartphones has put forward more demand for high-performance computing, and during Q1, advanced chip process technology (16nm and below) has brought high costs to the company. Revenue, accounting for 55% of total wafer revenue. Among them, 7nm shipments accounted for 35% of total wafer revenue.
The domestic epidemic is now under control, and 5G smartphone products have also rebounded from the “cold pool” in the past few months. Xin Guobin, vice minister of the Ministry of Industry and Information Technology, said at a recent press conference on the joint prevention and control mechanism of the State Council that as of March 26, there were 76 types of 5G mobile phone products in my country, with a cumulative shipment of more than 26 million units, of which more than 1,300 will be shipped in 2020. million.
The domestic 5G mobile phone trend is booming, and the same is true overseas. 5G mobile phone shipments have also simultaneously driven the growth of related chips. As far as the current global 5G chips are concerned, Qualcomm’s Snapdragon X series processors, Huawei HiSilicon’s Kirin, Balong series processors, Apple A series processors and other products are all manufactured by TSMC, and 7nm orders are endless.
According to the Top 10 global foundry revenue rankings in Q1 2020 released by the Top 10 Industry Research Institute, TSMC is firmly at the top of the list, and the “king of foundry” is well-deserved. Tower Semiconductor, World Advanced, Power Semiconductor, Hua Hong Semiconductor, and Dongfang Hi-Tech followed, ranking 2nd to 10th respectively.
(Top 10 global wafer foundry revenue rankings in Q1 2020 – data from Tuoji Industrial Research Institute)
Huang Wende said that Q2 revenue is expected to remain flat in 2020, and that weak demand for mobile products will be balanced by continued 5G deployments and HPC-related product launches. Specifically, Q2 revenue is expected to be between US$10.1 billion and US$10.4 billion (based on an exchange rate assumption of US$1 to NT$30.0), gross profit margin is expected to be between 50% and 52%, and operating profit margin is expected to be 39%. % to 41%.
Earlier, analysts at Citi Global Securities believed that TSMC may cut capital expenditures by $2 billion in 2020 as the outbreak of the epidemic has increased the risk of corporate operations. The cut of 2 billion expenditures is mainly for 3nm-related business expenses. Due to the insufficient supply of production equipment, TSMC cannot upgrade the fab production line, so the release date of 3nm is postponed by 6 months.
At present, the production capacity of TSMC’s 7nm process is close to full load, and the 5nm process has also begun to proceed steadily and orderly as planned, without much impact.
How does TSMC respond to Huawei’s HiSilicon order cut and US pressure?
A few days ago, it was reported that the United States plans to reduce the technology authorization rate used in chip production equipment from 25% to 10%, in order to restrict the supply of TSMC and other overseas companies to Huawei HiSilicon chips, so HiSilicon may Respond to the restraining order by transferring orders to SMIC.
According to the current technical capacity of SMIC, the 14nm process has achieved mass production at the end of last year, which can meet 95% of domestic demand. SMIC announced a sharp increase in its Q1 revenue guidance. Some people speculate that this is related to its order from HiSilicon. Although the transfer orders are mainly based on the 14nm process, if the news is true, it will also have a big impact on TSMC in the future. In addition, upstream industry chain sources said that TSMC was cut by Huawei HiSilicon for 5nm production, and the related production gap was fully eaten by Apple.
Wei Zhejia, CEO of TSMC, said at the financial report that TSMC has not seen customers cut orders significantly, but it is expected that the terminal market will be affected in the second half of this year. 5nm will be launched smoothly in the second half of this year, and 5nm process revenue will account for 10% of wafer revenue in 2020. Wei Zhejia also said that 3nm is advancing as planned, with risky mass production in 2021, and mass production will begin in the second half of 2022.
Liu Deyin, chairman of TSMC, also responded to the fact that the United States was adjusting trade rules earlier: “In the short term, there may be some impact. We will work with customers and take appropriate measures to reduce the impact on TSMC.”
(The picture comes from OFweek Weike.com)
Opportunities and challenges coexist, what will the king of foundry do next?
For a long time, the development of China’s semiconductor industry has not been as good as that of foreign countries, but Taiwan is an exception, especially the semiconductor manufacturers represented by TSMC, which are enough to compete with Samsung in chip foundry.
The development of TSMC is closely related to the domestic market, especially now that it has entered the 5G era. Chips put forward higher requirements in terms of quantity and performance. At present, TSMC has won world-class customers such as Apple, Qualcomm, and Huawei, and the opportunity is really not small.
Seizing the opportunity comes with many risks. Looking forward, the development of Moore’s Law is slowing down, and the current status of TSMC is clear at a glance: 7nm mass production, 6nm mass production, 5nm yield rate of 50%, 3nm successful tapeout, but 5nm/3nm may have to be delayed due to the impact of the epidemic; Looking back, Samsung, Intel, SMIC and other manufacturers are catching up. Affected by international relations, TSMC also has to consider various negative effects that may be caused by US trade restrictions in the future. Therefore, many challenges are still waiting for TSMC.
In 2018, when Zhang Zhongmou, Taiwan’s “Godfather of Semiconductors” and the founder of TSMC, announced his retirement, many people in the industry speculated that TSMC could still cope with the rapidly changing competitive landscape of the chip market? At present, TSMC, without Zhang Zhongmou’s leadership, has continued its past glory and is firmly seated as the king of foundry. But if you want to develop in the long term, you may be able to learn from Samsung’s “diversified” layout.