Taiwan's chip maker TSMC predicts 4% rise in Q2 sales

Taiwan Semiconductor Manufacturing Company (TSMC), one of the world’s largest chip makers, projected a 4 per cent increase in its second quarter revenue, defying supply chain disruptions and challenges faced by the electronics industry.

TSMC, whose customers include the world’s biggest technology company, Apple, and Qualcomm, expects sales during the April-June period to reach between $17.6 billion and $18.2bn, matching the previous forecast issued by the company in April, it said on Friday.

Gross profit margin is expected to be between 56 per cent and 58 per cent, while operating profit margin is forecast to reach roughly 45 per cent to 47 per cent, TSMC said.

Shares of TSMC closed up 2.1 per cent on Friday.

The company, which is scheduled to announce its official second quarter results next week, did not provide an estimate for net profit during the period.

Founded in 1987, Hsinchu-based TSMC captured nearly 70 per cent share of the global smartphone chipset market in the first quarter of this year, the latest report by Hong Kong-based Counterpoint Research shows.

TSMC dominated in all segments, ranging from application processors to complete system-on-chip and cellular modems, the report said.

It was followed by the South Korean electronics giant Samsung, which had almost 30 per cent market share.

"TSMC and Samsung together control the entire smartphone chipset market and TSMC is more than double Samsung in terms of manufacturing scale and market share," said Parv Sharma, senior research analyst at Counterpoint Research.

Samsung Electronics also forecast a 21 per cent growth in revenue for the second quarter on Thursday, which kicked off a rally in the stocks of chip makers.

Semiconductors or chips are important components in electronic devices, such as smartphones, as well as in electric and self-driving vehicles. They are used to manage functions such as navigation and parking, and for monitoring engine performance.

The global semiconductor market, which was up-ended by Covid-induced supply chain constraints in 2020 and 2021, is projected to reap nearly 14 per cent more in revenue this year compared to 2021, to reach $676bn, a report by Gartner said.

Driven by increasing demand and rising chip prices, the industry will hit $700.6bn in 2023, a yearly rise of 3.6 per cent, the US research company said.

TSMC is also expected to benefit from rising demand, increasing chipset prices and the coming September launches of new products by iPhone manufacturer Apple.

In March last year, TSMC unveiled plans to invest $100bn by 2024 to increase its production capacity to meet surging demand.