iPhone chip supplier TSMC anticipates drop in premium phone shipments, Bitcoin to fuel gro...

Posted:
in iPhone
Chip manufacturer TSMC is anticipating a decline in shipments for premium smartphones this year, advising during its fourth-quarter earnings briefing that orders relating to cheaper mobile devices will rise slightly, with company growth likely to occur through embracing cryptocurrencies.




Speaking to investors during an earnings conference call, TSMC co-chief executive C.C. Wei claimed "In terms of shipment units, high-end smartphones are decreasing for this year." Brands and types of smartphone were not broken down by the firm, but TSMC is known to be a key supplier to Apple, providing it with the A-series processors used in its iPhones, iPads, and other devices.

Earlier this month, reports surfaced claiming TSMC has made a deal to continue being the sole provider of A-series chips to Apple, beating Samsung to secure the "A12" orders. Current speculation suggests the new chip will move from the 10-nanometer process used in the A11 Bionic to a 7-nanometer process, shrinking the die to pack more performance into the chip and possibly to improve overall power efficiency.

While the premium end of the market is thought to reduce, Wei is still optimistic on the mobile segment, reports Nikkei Asian Review, suggesting "Mid-to-low-end smartphones will increase by several percentage points." Overall, Wei warns TSMC's wafer revenue for mobile devices will be flat compared to 2017.

Manufacturing for mobile devices makes up a considerable amount of TSMC's revenue, reportedly accounting for half of the 977.45 billion New Taiwan dollars ($33 billion) it earned in 2017. For 2018, TSMC believes it will have a strong year despite the supposedly weakening mobile market, and expects revenue growth of between 10 and 15 percent.

Recent supply chain rumors claim there will be a reduction in orders for components used in Apple's iPhone X, iPhone 8, and iPhone 8 Plus in the first quarter. While thought to be a seasonal depression, with the existence of three flagship Apple devices complicating matters, this does not necessarily offer any indications relating to component supplies for the rest of the year.

Rather than from the mobile market, TSMC's revenue growth may come from its other businesses interests, including the cryptocurrency mining industry, and the increased use of AI applications in data centers and in electronic devices.

On the cryptocurrency side, the Beijing-based Bitmain has become one of TSMC's best clients since the second half of 2017. The firm specializes in bitcoin mining chips and solutions, and has grown to account for between 3 percent and 5 percent of TSMC's revenue in the third quarter, as well as controlling between 70 and 80 percent of the mining chip market.

Due to the volatile nature of cryptocurrencies, TSMC Chairman Morris Chang warns the company "is not going to add capacity for digital currency mining specifically." Estimated revenue from cryptocurrency mining was not provided, but it was revealed revenue in the sector was between $350 million and $400 million in the quarter ending in September.

In the quarter ending in December, TSMC reported revenue of NT$277.57 billion ($9.41 billion), an increase of 5.9 percent year-on-year and a new record for the company.

Comments

  • Reply 1 of 20
    Once Hashgraph starts to widely roll out, both cryptocurrencies and the blockchain are obsolete. I urge people who have a lot of money tied up in crypto to read up on it.
    edited January 2018
  • Reply 2 of 20
    GG1GG1 Posts: 276member
    I'm puzzled by the crypto mining direction. Seems more volatile than customer orders. Perhaps it is essentially free for them if they have the hardware (they make the mining chips) and have a renewable energy source.
  • Reply 3 of 20
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
  • Reply 4 of 20
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
    The price of a new iPhone is currently, $349 and up, or more realistically $699 for an iPhone 8.  But you knew that.
    SpamSandwichjony0lolliverbaconstangwatto_cobra
  • Reply 5 of 20
    avon b7avon b7 Posts: 4,178member
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
    The price of a new iPhone is currently, $349 and up, or more realistically $699 for an iPhone 8.  But you knew that.
    But the 349 dollar phones aren't premium phones. $699 is but we are possibly going to see lots of movement in the affordable premium segment which isn't in the $699 range.

    Time will tell, though.
  • Reply 6 of 20
    LatkoLatko Posts: 398member
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
    The price of a new iPhone is currently, $349 and up, or more realistically $699 for an iPhone 8.  But you knew that.
    Selling price has no primary relevance in a replacement market, but depreciation has increased while functional improvement stagnates.
    So the climbing the luxury/fashion ladder as Apple does, may let it retain its premium margins but can hamper its suppliers simultaneously
    edited January 2018
  • Reply 7 of 20
    fallenjtfallenjt Posts: 3,980member
    Doomed. AAPL will drop tomorrow. While I sold them at $180 today.
  • Reply 8 of 20
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
    You're confused. You can buy a new iPhone for $349, $449, $549, $699, and $999. The top-tier model is not the only option from Apple.

    https://www.apple.com/iphone/


    edited January 2018 lolliver
  • Reply 9 of 20

    avon b7 said:
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
    The price of a new iPhone is currently, $349 and up, or more realistically $699 for an iPhone 8.  But you knew that.
    But the 349 dollar phones aren't premium phones. $699 is but we are possibly going to see lots of movement in the affordable premium segment which isn't in the $699 range.

    Time will tell, though.
    You're moving the goalposts again. Seanis said the price of a "new" iPhone was $1000, which is not true. That's the price of the flagship or premium phone, but that is not the price of all new iPhones as he passed it.
    lolliver
  • Reply 10 of 20
    GG1 said:
    I'm puzzled by the crypto mining direction. Seems more volatile than customer orders. Perhaps it is essentially free for them if they have the hardware (they make the mining chips) and have a renewable energy source.
    TSMC isn't doing the actual Bitcoin mining. The article says they are selling mining ASICs to Bitmain, which sells mining rigs to actual customers. Neither TSMC or Bitmain actually mine cryptocurrency, they are just building the gear that miners use in their mining operations.

    To give an idea of the power needs for one mining rig. The page for the Bitmain Antminer S9, says the rig uses 1,372 Watts from the outlet. That comes to 32.9 kWh per day or 12,020 kWh per year. My electricity rates are 11.5 cents per kWh, so that works out to $3.78 per day or $1,380 per year. I don't know what the expected yield is for something like this, but it's a nice little space heater that you could run year round.
  • Reply 11 of 20
    volcanvolcan Posts: 1,791member
    GG1 said:
    I'm puzzled by the crypto mining direction. Seems more volatile than customer orders. Perhaps it is essentially free for them if they have the hardware (they make the mining chips) and have a renewable energy source.
    I believe TMSC Solar ceased operations last year. I'm not so sure they are planning to do the actual Bitcoin mining themselves but rather selling equipment to others such as Bitmain. Right now even if you have free power and internet like what might be provided to small corporate business suites as part of their lease, with a $6-7K mining box you can only make a couple dollars a day. I has become nearly impossible to make a profit mining as the system is designed to continually make it more difficult to find transaction keys as time goes on. Investing in buying Bitcoins is very risky due to the volatile prices. Not a stable business model at all.
    edited January 2018 baconstang
  • Reply 12 of 20
    GG1GG1 Posts: 276member
    GG1 said:
    I'm puzzled by the crypto mining direction. Seems more volatile than customer orders. Perhaps it is essentially free for them if they have the hardware (they make the mining chips) and have a renewable energy source.
    TSMC isn't doing the actual Bitcoin mining. The article says they are selling mining ASICs to Bitmain, which sells mining rigs to actual customers. Neither TSMC or Bitmain actually mine cryptocurrency, they are just building the gear that miners use in their mining operations.

    To give an idea of the power needs for one mining rig. The page for the Bitmain Antminer S9, says the rig uses 1,372 Watts from the outlet. That comes to 32.9 kWh per day or 12,020 kWh per year. My electricity rates are 11.5 cents per kWh, so that works out to $3.78 per day or $1,380 per year. I don't know what the expected yield is for something like this, but it's a nice little space heater that you could run year round.
    Thanks for clarifying. I had to read the paragraph again to understand completely.
  • Reply 13 of 20
    avon b7avon b7 Posts: 4,178member

    avon b7 said:
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
    The price of a new iPhone is currently, $349 and up, or more realistically $699 for an iPhone 8.  But you knew that.
    But the 349 dollar phones aren't premium phones. $699 is but we are possibly going to see lots of movement in the affordable premium segment which isn't in the $699 range.

    Time will tell, though.
    You're moving the goalposts again. Seanis said the price of a "new" iPhone was $1000, which is not true. That's the price of the flagship or premium phone, but that is not the price of all new iPhones as he passed it.
    But I wasn't replying to what seanmorris said. I was replying to randominternetperson. As he correctly stated, $699 is a premium priced phone (so is $1000). I simply pointed out that this news was on premium lines and $349 is not premium.

  • Reply 14 of 20
    tulkastulkas Posts: 3,754member
    It’s disingenuous to say they have 3 flagships this year. They have one and it’s the X. Period. The 8/8+ are now based on their legacy design. They are the SE for 2017, whether anyone wants to admit it or not.
  • Reply 15 of 20
    tzeshantzeshan Posts: 2,007member
    I guess high end Android smartphones are decreasing due to iPhone X. Last few years high end Android copycats tried real hard to match iPhone feature by feature. They claim their phones beat iPhones here and there. Do you still remember? But FaceID is a new feature no Android phone is able to duplicate without deceiving the end buyers. It will probably take at least two years before they can match the capability of FaceID. Thus I believe high end Android smartphones are decreasing orders due to difficulty to sell and make a profit. 
  • Reply 16 of 20
    avon b7avon b7 Posts: 4,178member
    tzeshan said:
    I guess high end Android smartphones are decreasing due to iPhone X. Last few years high end Android copycats tried real hard to match iPhone feature by feature. They claim their phones beat iPhones here and there. Do you still remember? But FaceID is a new feature no Android phone is able to duplicate without deceiving the end buyers. It will probably take at least two years before they can match the capability of FaceID. Thus I believe high end Android smartphones are decreasing orders due to difficulty to sell and make a profit. 
    Sales of high end Android phones have probably increased but the segment it itself was largely flat or even showing signs of contraction (at least prior to the release of iPhone X). Overall smartphone sales showed growth. However, it is definitely true that the returns on the effort involved in high end phones are not very attractive as production costs are higher unless you can shift a higher number. Also, if growth was minimal for premium phones, the complete opposite was true of mid range phones. That was off the charts as users were getting lots of high end features for half the price. Users were faced with the 'why pay double the price or more for a high end phone when I'm not getting double the features or double the perceived value of those features'. In September, Apple it self decided to change its strategy and move closer to that pricing band, probably only too aware of how the industry was developing and it's desire to squeeze more juice out of services.

    That's where FaceID comes in and is probably adding a fair amount to the cost of the phone (at least the iPhone X initially). It's one of the reasons it didn't appear on the iPhone 8.

    Equivalent FaceID systems won't take two years to appear, at least in a hardware sense. Huawei (via its Honor brand) raised the curtain on its own system just a few weeks after Apple and promised 10 times the resolution of Apple's dotmap and ultra fast unlocking. Shortly after that, an Honor engineer demonstrated an actual working prototype to substantiate the claims.

    That's on the hardware. Software is another matter. Apple seems to have done a great job here thanks to the learning aspect of its NPU.

    However, things like only showing detailed notifications to the owner of the phone using recognition technologies were already present on some Huawei phones. The Honor Magic announced at the end of 2016 apparently worked very well:

    https://techprolonged.com/2016/12/huawei-honor-magic-official-specs-price-availability/

    Perhaps half the software side has been in the can for a long while. The other half really needs an NPU to shine and that appeared on the Kirin 970 last year and is already on some Honor phones. Put it all together and we might see a FaceID style solution in two months instead of two years.




  • Reply 17 of 20
    ksecksec Posts: 1,567member
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
    You're confused. You can buy a new iPhone for $349, $449, $549, $699, and $999. The top-tier model is not the only option from Apple.

    https://www.apple.com/iphone/


    May be the more accurate word he was looking for is "latest" iPhone.
  • Reply 18 of 20
    avon b7 said:

    avon b7 said:
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
    The price of a new iPhone is currently, $349 and up, or more realistically $699 for an iPhone 8.  But you knew that.
    But the 349 dollar phones aren't premium phones. $699 is but we are possibly going to see lots of movement in the affordable premium segment which isn't in the $699 range.

    Time will tell, though.
    You're moving the goalposts again. Seanis said the price of a "new" iPhone was $1000, which is not true. That's the price of the flagship or premium phone, but that is not the price of all new iPhones as he passed it.
    But I wasn't replying to what seanmorris said. I was replying to randominternetperson. As he correctly stated, $699 is a premium priced phone (so is $1000). I simply pointed out that this news was on premium lines and $349 is not premium.

    No, you're just confused. Seanis said "the price of a new iPhone is going to be $1000", and Random correctly corrected him that the price of a new iPhone was $349+. These are facts. Then you moved the goalposts and starting talking about how the price of the "premium" iphones was $699, when nobody had mentioned "premium" at all -- Seanis only claimed that "new iPhones" were $1000. He never mentioned premium. The article may be about premium phones, but his claim that new iPhones were 1000 was incorrect and he was corrected for it.

    Anyway even the question of what is a premium phone is debatable -- one could very well argue that all iPhones are by their nature premium phones, and the non-premium phones TSMC produces for are all the crappy knockoffs. Even if you didnt subscribe to that, one could argue that the 7 is still a premium device over the SE and 6 models, and thats $549. 

    Anyway you argue it, Seanis claim that $1000 is the price of a new iPhone is BS.
    edited January 2018
  • Reply 19 of 20
    avon b7avon b7 Posts: 4,178member
    avon b7 said:

    avon b7 said:
    If the price of a new IPhone is going to be $1000+ it’s no wonder people are waiting longer between upgrades.
    The price of a new iPhone is currently, $349 and up, or more realistically $699 for an iPhone 8.  But you knew that.
    But the 349 dollar phones aren't premium phones. $699 is but we are possibly going to see lots of movement in the affordable premium segment which isn't in the $699 range.

    Time will tell, though.
    You're moving the goalposts again. Seanis said the price of a "new" iPhone was $1000, which is not true. That's the price of the flagship or premium phone, but that is not the price of all new iPhones as he passed it.
    But I wasn't replying to what seanmorris said. I was replying to randominternetperson. As he correctly stated, $699 is a premium priced phone (so is $1000). I simply pointed out that this news was on premium lines and $349 is not premium.

    No, you're just confused. Seanis said "the price of a new iPhone is going to be $1000", and Random correctly corrected him that the price of a new iPhone was $349+. These are facts. Then you moved the goalposts and starting talking about how the price of the "premium" iphones was $699, when nobody had mentioned "premium" at all -- Seanis only claimed that "new iPhones" were $1000. He never mentioned premium. The article may be about premium phones, but his claim that new iPhones were 1000 was incorrect and he was corrected for it.

    Anyway even the question of what is a premium phone is debatable -- one could very well argue that all iPhones are by their nature premium phones, and the non-premium phones TSMC produces for are all the crappy knockoffs. Even if you didnt subscribe to that, one could argue that the 7 is still a premium device over the SE and 6 models, and thats $549. 

    Anyway you argue it, Seanis claim that $1000 is the price of a new iPhone is BS.
    You have confused yourself. My comments are in the context of the article, the second line of which directly references premium phones. Yes, I was taking that into account. Now, you may well ask where the term 'starts' in pricing and in features. That's fine but it is exactly why I normally use Counterpoint Research references to the pricing bands. Counterpoint is referenced in many articles here at AI. It's also why have been mentioning 'affordable premium' for the last 13 months. It's not a term I coined and those phones aren't in fact premium.

    $699 is a premium phone price. Debate that all you want but few people will argue against it. Do we know have a new band? Ultra premium? And, for the record no goalposts were moved.
    edited January 2018 gatorguy
  • Reply 20 of 20
    Looks like a series of my completely inoffensive apolitical comments have been scrubbed from this thread?
Sign In or Register to comment.