TSMC Has High Customer Inventories, Demand Amid Coronavirus

Taiwan Semiconductor Manufacturing Co. Q3 revenue increased 17% in U.S. dollars sequentially on "strong demand for advanced technologies and special technology solutions” in 5G smartphones, high-performance computing (HPC) and IoT applications, said Chief Financial Officer Wendell Huang on a Thursday investor call. Smartphone revenue increased 12% and was 46% of third-quarter sales, he said. TSMC continues to expect “faster penetration” of 5G smartphones compared with 4G, he said. “For this year, we still forecast a high-teens penetration rate and next year even higher.” Though the pandemic brings “some level” of negative impact to global economies, “COVID-19 is accelerating digital transformation, while 5G and HPC-related applications continue to drive semiconductor content enrichment,” said CEO C.C. Wei. He expects TSMC customers to maintain inventories well above their seasonal levels as a buffer against further COVID-19 supply-chain disruptions. Due to the “uncertainties” of the supply chain now, expect the high-level inventory trend to “continue for a longer period,” he said. TSMC won’t use any “short-term supply shortage” as an opportunity to raise “our wafer price,” he said. TSMC forecasts that semiconductor industry revenue, excluding memory, will rise by mid-single digits in 2020, he said. TSMC is “evaluating the impact to the semiconductor industry” from DOD’s export restrictions on Semiconductor Manufacturing International, China’s largest chipmaker, said Wei.