Taiwan Semiconductor Manufacturing Co. reported an 11% increase in quarterly profit, underscoring how the company has benefited from a global chip shortage that’s driven up orders from the automotive and other industries.
Net income for the quarter ended in June rose to NT$134.4 billion ($4.8 billion), slightly below the average analyst estimate of NT$136.15 billion. Revenue came in at NT$372.15 billion based on previously released monthly sales figures.
While an ongoing semiconductor shortage has hampered the global economic recovery from Covid-19, suppliers like TSMC, the world’s largest contract chipmaker, are among beneficiaries as they race to fulfill orders. The Taiwanese company is also likely to get a lift from plans by Apple Inc., its largest customer, to ready 90 million units of upgraded iPhones for the second half of this year.
“As TSMC will likely keep loading its capacity at extremely high utilization in upcoming quarters, we expect the strong revenue momentum to continue through end of 2021,” Citigroup analyst Roland Shu wrote in a note last week. “Strong demand but limited capacity increases in the supply chain will continue to allow TSMC to best utilize its capacities and further strengthen its pricing power.”
In early July, Daimler AG and Jaguar Land Rover warned that sales will be further curtailed by the persistent chip shortage, with the latter saying deliveries in the second quarter will be 50% worse than initially thought. The U.K. economy’s growth slowed to 0.8% in May, partly due to a 16.4% slump in the production of transport equipment triggered by a lack of semiconductors.
United Microelectronics Corp., a smaller rival to TSMC, said last week that chip demand could continue to outpace supply until 2023.
In response to the demand from carmakers, TSMC has said it will increase shipments to the sector. Revenue from automotive clients increased 12% from the first quarter, while high-performance computing climbed by a similar magnitude. Sales to smartphone clients, the biggest chunk of its revenue, eased 3% in the seasonally slower second quarter.
Gross margin was 50%, below the roughly 51% average predicted by analysts. In early June, a cluster of Covid-19 infections at a factory in central Taiwan forced King Yuan Electronics Co., one of the world’s leading chip-testing service providers, to shut operations temporarily. That led to minor disruptions in the Taiwanese semiconductor supply chain which many around the world rely on. TSMC said on Monday three of its employees were confirmed to have been infected, though it doesn’t see any impact on operations.
- TSMC today announced consolidated revenue of NT$372.15 billion, net income of NT$134.36 billion, and diluted earnings per share of NT$5.18(US$0.93 per ADR unit) for the second quarter ended June 30, 2021.
- Year-over-year, second quarter revenue increased 19.8% while net income and diluted EPS both increased 11.2%. Compared to first quarter 2021, second quarter results represented a 2.7% increase in revenue and a 3.8% decrease in net income. All figures were prepared in accordance with TIFRS on a consolidated basis.
- In US dollars, second quarter revenue was $13.29 billion, which increased 28.0% year-over-year and increased 2.9% from the previous quarter.
- Gross margin for the quarter was 50.0%, operating margin was 39.1%, and net profit margin was 36.1%.
- In the second quarter, shipments of 5-nanometer accounted for 18% of total wafer revenue; 7- nanometer accounted for 31%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 49% of total wafer revenue.
