TSMC Assumes COVID-19 ‘Stabilizing’ in June, Continued 5G Deployment

Taiwan Semiconductor Manufacturing Co. expects continued 5G deployment. The key iPhone chip supplier was one of the few tech companies not to change 2020 guidance. Though COVID-19 will send global smartphone demand plunging by a high-single digit percentage this year, “5G network deployment continues and OEMs continue to prepare to launch 5G phones,” said CEO C.C. Wei Thursday. The company is standing by its forecast that 5G penetration of the smartphone market will reach into the “mid-teens” in 2020, he said. TSMC expects “faster penetration of 5G smartphones” compared with 4G, “with substantially higher silicon content,” said Wei. “We believe 5G as a multiyear megatrend is still strong.” The company's Q1 sales fell 1% sequentially. The “continued ramp” of 5G smartphone chips kept the decline to “much less than seasonality” trends, he said Thursday. The smartphone business, 49% of total revenue, nevertheless declined 9% on weaker global handset demand, he said. Though the company hasn’t seen “significant order reduction,” supply chain “dislocation” and weaker “end-market demand” from COVID-19 are expected to persist at least through June, said Wei. It’s forecasting the overall semiconductor market to be “flattish” to slightly down this year, he said. If COVID-19 takes “longer than that” to stabilize, “the macro economy will be much worse than we thought and definitely will affect the semiconductor industry,” conceded Wei in Q&A. “We don't know yet. Let's be hopeful that all the human beings will be safe and healthy and everything stabilizing in June.”