TSMC talks cryptocurrency as sales driver
TSMC reported net income of NT$99.29 billion (about US$3.36 billion) on revenue of NT$277.57 billion (about US$9.40 billion) in 4Q17. The revenue was up 5.9 percent year-on-year.
For 1Q18 TSMC said it expected revenue of between US$8.40 and US$8.50 billion, an increase of 12.8 percent year-on-year at the mid-point. The management team also disclosed it has set a capital expenditure budget of between US$10.5 billion and US$11 billion. This is similar to 2017 and is likely to be kept “flattish” for the next few years.
With TSMC expecting a compound annual growth rate over a similar time of 5 to 10 percent this will result in capex falling as a percentage of revenue from 30 to 35 percent as it is today to 20 to 30 percent in the future, the company said.
However, a major talking point of the conference was the surging demand that TSMC is seeing for cryptocurrency mining processors.
Co-CEO Mark Liu quickly addressed this in his comments with reference to cryptocurrency mining IC demand, saying: “In the past TSMC’s open innovation ecosystem has helped incubate numerous growth drivers for the semiconductor industry. In the 1990s it was PC chipsets, in the early 2000s graphics processors, in the mid-to-late 2000s it was chips for mobile phones and starting in 2010 smartphone chips. Those waves continuously sprout in our ecosystem.”
Liu continued: “Lately we’ve observed demand for cryptocurrency mining has surged. Cryptocurrency mining requires high performance, low-power computing. TSMC’s advanced technology suits it well.”
Liu added that TSMC has sized the 2018 market for CCM carefully but that because it was based on financial speculation it was a difficult market to assess far into the future. “However we are quite certain that deep learning and blockchain, which are at the core of cryptocurrency mining, will lead to new waves of semiconductor innovation and demand for years to come.”
Next: HPC not smartphone
Later in the call Liu revealed that of its four major growth areas mobile phones, while responsible for nearly 50 percent of sales, will be flat in 2018 suggesting market saturation is being reached. The growth areas are high performance computing (HPC), IoT and automotive, he said.
Liu said Smartphones would continue to include new features in 2018 including 3D authentication and 3D sensing with 7nm process being used for premium phones and 12nm for mainstream phones. Both are on-course to ramp in 2018.
However, HPC business will enjoy the most growth from sales of GPUs for machine learning and cryptocurrency mining ASICs, Liu said. These will use processes from 16nm down to 7nm. The key applications for IoT are smart voice processing assistants, application processors for wearables and wireless microcontrollers for smart homes. 22nm processes will be key to those applications.
Morris Chang, chairman of TSMC speaking , also weighed in cryptocurrency mining in response to a question from an analyst. He said: “The urge to mine cryptocurrency is very strong but the price of cryptocurrency is very volatile. Demand right now, last year, has been very strong. We have sized the demand carefully. I believe we satisfy customers without being too optimistic,” he said.
TSMC declined to give a figure for how much of TSMC’s revenue cryptocurrency mining is currently responsible.
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