Apple A13 supplier TSMC reports stronger than expected smartphone demand

in General Discussion
The maker of Apple-designed A13 chip, TSMC, reports smartphone demand that is stronger than expected, and is investing up to $5 billion extra ahead of its new forecasts about 5G models.


Ahead of Apple's earnings call on October 29, supplier TSMC has issued its own financial briefing and reported the firm's strongest quarterly profit growth in two years. The company has also announced an increase of up to $5 billion in its spending, its capital expenditure, which it sees as necessary following its forecast of stronger smartphone demand.

"5G smartphone growth momentum is stronger than we expected," said CC Wei, CEO of TSMC in a briefing. "We have good reasons to increase our capex this year and next year."

According to Reuters, TSMC reported a rise of 13.5% in third quarter net profits, bringing the company $3.3 billion, with revenue up 10.7% to $9.4 billion. The company had estimated its profits would be between $9.1 and $9.2 billion.

TSMC also reported that its earnings from smartphones now made up 49% of the company's total revenue, compared to 45% this time last year. Sales to China were also up from 15% of TSMC total earnings, to 20%.

While there is not a one-to-one correlation between TSMC's earnings and Apple's iPhone sales, there is a correlation.

Additionally, Wei added that TSMC has almost doubled its forecast for 5G smartphone demand in 2020. While not stating specific figures, he said the company was now predicting what Reuters called mid-teen percent demand. Previously the firm had been forecasting single-digit demand.

These predictions and a record $14 billion to $15 billion capital expenditure come despite the worldwide slowdown in smartphone demand, and suggest that Apple's earnings may be similarly better than anticipated.

Apple is expected to release 5G-capable iPhones in September next year. It's understood that those models will use 5G modems made by Qualcomm, but Apple is also believed to be developing its own chipset for iPhones in 2022.


  • Reply 1 of 3
    MacProMacPro Posts: 19,500member
    Maybe AAPL will hit $250 soon.
  • Reply 2 of 3
    MacPro said:
    Maybe AAPL will hit $250 soon.
    Said that 6 months ago, by end of year.
  • Reply 3 of 3
    wizard69wizard69 Posts: 13,377member
    MacPro said:
    Maybe AAPL will hit $250 soon.
    Don’t bet on it!    Not that I know one way or the other, but the reality is TSMC has a huge number of clients some not even involved in smart phones.  AMD for example is a big factor in 7nm.     

    In any event if you follow industry publications you will know that TSMC has had to push back on delivery dates.  It is rumored that this has set some AMD deliveries behind.     In effect TSMC has more work than it can handle at the moment which is likely part of the reason for the spend.  
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