TSMC outlook bullish as it expects to ride on cryptocurrency boom

TAIPEI • Taiwan Semiconductor Manufacturing Co (TSMC) expects a boom in the cryptocurrency market to drive up demand for high-end chips and help it post a record revenue this year, outweighing softening sales to smartphone vendors.

TSMC's outlook highlights a trend of chipmakers benefiting from new technology, such as cloud computing, blockchain, self-driving cars and artificial intelligence, that require powerful processing power and low energy-consumption. Cryptocurrency is the latest entry on this list of revenue drivers.

"The urge to mine cryptocurrency is very strong, and the incentive, of course, depends on the price of cryptocurrency," TSMC chairman Morris Chang said at an earnings conference yesterday, after the firm earlier reported a better-than-expected quarterly profit.

"Demand right now or for the last year has been very strong, and we expect it to continue to be strong," he added.

TSMC expects revenue to grow between 10 and 15 per cent this year, versus a modest 3.1 per cent growth in 2017, after factoring in flat demand from mobile customers.

TSMC, which is a key supplier for Apple, Qualcomm and Nvidia Corp, posted a net profit of NT$99.29 billion (S$4 billion) for the quarter ended December, just 0.9 per cent less than a year ago. But this was slightly ahead of an average forecast of NT$97.78 billion drawn from 20 analysts polled by Thomson Reuters I/B/E/S.

Revenue rose to US$9.2 billion (S$12 billion), in line with the company's guidance and up 5.9 per cent from a year ago.

Apart from cryptocurrency-related demand, results were also aided by a major smartphone release, TSMC's co-chief executive officer C. C. Wei, said. Analysts said he was referring to Apple's delayed launch of iPhone X in November.

Revenue at TSMC's computer segment surged 25 per cent in the quarter, while its communications business, which generates nearly 60 per cent of the company's total sales, logged a 2 per cent decline.

High performance computing will register the strongest growth this year, thanks to demand for graphics chips and high-performance chips used to mine cryptocurrencies, said co-CEO Mark Liu, who will take over when Mr Chang retires as chairman in June.

Cryptocurrencies are digital currencies that use encryption techniques for security and can be traded. Mining consumes large quantities of energy and needs chips with a lot of processing power to solve complex math puzzles to validate transactions.


A version of this article appeared in the print edition of The Straits Times on January 19, 2018, with the headline 'TSMC outlook bullish as it expects to ride on cryptocurrency boom'. Print Edition | Subscribe