Taiwan Semiconductor shares headed for record as bitcoin bolsters chip demand
Beijing — Shares in Taiwan Semiconductor, Apple’s main chip supplier, gained as much as 2% after the company reported quarterly results ahead of expectations, buoyed by global demand for the powerful semiconductors used in cryptocurrency mining.
The stock was up 1.6% at NT$252.50 in early Taipei trade, on track to surpass its record high.
Investors focused on Taiwan Semiconductor Manufacturing Co’s (TSMC’s) ability to ride a boom in cryptocurrency mining driven by bitcoin’s 1,400% leap last year — the same explosive growth that has bolstered shares of designers from Nvidia to Advanced Micro Devices.
Founder Morris Chang — who is handing the company’s reins to two lieutenants this year — told investors on Thursday that high-performance computing, the internet of things and cars will help drive revenue growth of 10%-15% in 2018. That compares with 3.1% growth in 2017.
TSMC posted a net profit of T$99.29bn ($3.36bn) for the quarter ended December, just 0.9% less than a year ago. But this was slightly ahead of an average forecast of T$97.78bn drawn from 20 analysts polled by Thomson Reuters IBES.
Revenue for the quarter rose to $9.2bn, in line with the company’s guidance and up 5.9% from a year ago.
The strong revenue forecast "is a hint that, given its technological lead, TSMC can continue to gain market share this year", Jinyuan Lv and Simon Lu, analysts for JihSun Securities, wrote on Friday. "Its main growth in 2018 will come from high-performance computing" and other areas.
Mining — the process of winning digital coins by crunching complex equations at the heart of virtual currencies like bitcoin — requires the raw processing power of the types of chips that TSMC cranks out for Nvidia or AMD.
Crypto-mining could account for as much as 10% of the Taiwanese company’s revenue in 2018, some analysts say, becoming its fastest-growing segment.
That is a timely boost, as expectations for iPhone X shipments shrink and Chinese smartphone demand tapers off.
On Thursday, TSMC forecast revenue that fell short of projections.
Smartphone shipments slid almost 12% in China in 2017 as portions of the world’s largest mobile market approached saturation point, according to the China Academy of Information and Communications Technology.
TSMC, however, may win more orders from fast-growing brands such as Huawei, which designs its own mobile processors and may turn to TSMC for mass production.
The company is preparing this year to move into cutting-edge 7-nanometer chip production from June — a big question mark given that the technology is untested.
But a bigger unknown may be TSMC’s budding crypto-miners business, at a time regulators from China to South Korea have clamped down on virtual currency trading to curb financial risks.
Bloomberg and Reuters