cens logo

TSMC's Chang: H2 Revenue to Exceed that in H1 Despite Gloomy Market Outloook

Apple's order for A9 processors with TSMC is among factors behind the chairman's optimism

Jun 22, 2015 | By Ken Liu

Compiled by KEN LIU

Morris Chang projects rising H2 revenue for TSMC amid gloomy market outlook. (Photo courtesy of TSMC) Morris Chang projects rising H2 revenue for TSMC amid gloomy market outlook. (Photo courtesy of TSMC)

Taiwan Semiconductor Manufacturing Co. (TSMC), recognized as the world's No.1 pure silicon foundry, Chairman Morris Chang projects its revenue for the second half of this year to outperform that for the first half and its revenue for the entire year to grow at double-digit rate year on year regardless of gloomy market outlook.

Some industry executives expect the company's revenue to halve in the second half due to recent developments that could upset the status quo, including Intel Corp.'s acquisition of Altera Corp. and the rising semiconductor supply chains in mainland China.

Since Intel is TSMC's competitor in the silicon foundry market and Altera, an American programmable logic IC vendor, is among TSMC's prime customers, the acquisition could potentially enable Intel to take over all of Altera's contracts.

Nevertheless, Chang points out that although Intel is a formidable chipmaker in technology and capacity supply, the company won't be able to easily transform itself into a pure foundry supplier from an integrated device manufacturer (IDM) in the short term, also citing Intel Chief Executive Officer (CEO) Brian Kranich's statement at the acquisition conference that Intel would still depend highly on TSMC for its valuable partnership.

Chang said two or three years ago that TSMC expected acquisitions to happen in the industry, but the acquisitions would not affect TSMC simply because TSMC is the world's leading contract manufacturer of logic ICs with reliable technology and production capacity.

Responding to reported anxiety in the sector that rising semiconductor supply chains in mainland China would soon impact Taiwan's semiconductor supply chains, Chang points out that although the mainland's authorities are determined to develop homegrown supply chains, so far they have not been able to compete against Taiwan's supply chains simply with determination and abundant capital.

Suggesting the critical necessity of advanced technologies, he notes that over the past 10 years, China's semiconductor industry has not been able to catch up to TSMC after years of development on government incentives, instead has lagged further behind because of lacking cutting-edge technologies, adding that they can not even compete with Taiwan in the advanced fields of IC testing and packaging.

Industry executives point out that this year TSMC's revenue growth will mostly driven by Apple's contracts for making the A9 microprocessors. They say TSMC beats Samsung with its 16nm FinFET process technology vs. Samsung's 14nm FinFET to win such contracts. Samsung's 14nm FinFET process, they say, failed to build an A9 sized as small as the one with TSMC's 16nm process, with performance of the two chips being similar.

TSMC began pilot production of A9 in March this year before volume production in June, with output topping 20,000 chips a month based on 16nm FinFET Plus process.

Industry executives say the company will begin to deliver the chips in September in large volume, likely bringing its revenue of that month to fresh all-time high.

TSMC has reportedly won not just the contract for making A9s but also the contracts for packaging and testing the chips, having reportedly had 100 tailor-made packaging and testing machines verified at Apple for the production.

Industry executives point out that A9 is a downsized version of A8, using fin field-effect transistor (FinFET) process to outperform A8 in energy efficiency and clocking speed.

A8 is built on 20nm process by TSMC, which won the contracts after tough competition with Samsung. Industry executives say the competition worked to TSMC's favor not just because its 20nm process outperformed Samsung's but also Apple found the South Korean maker a thorn in its side: Samsung was on its way off Apple's contract supplier list as the two have been engaged in smartphone patent lawsuits.

Thanks to A8 contracts, TSMC's revenue and earnings for 2014 set historical highs, according to industry executives. Last year, the company earned NT$263.9 billion (US$8.51 billion), or NT$10.19 per share, in after-tax net income on revenue of NT$762.8 billion (US$24.60 billion).

While many foreign institutional investors project TSMC's revenue for the final quarter to grow at annual rate of only 2 percent, Andrew Lu, Head of ex-Japan Asia Pacific Semiconductor & TFT Research with Barclays Capital Securities Taiwan Limited, gives a double-digit rate projection, which is based on estimates that revenue from A9 contracts will rise to account for 12 percent of TSMC's total in the final quarter from only 1 percent in the third quarter; Analog Devices, Inc. (ADI) will switch the contract manufacturing of the 300,000 wafers of Force Touch sensors for iPhone 6 by TSMC to 12-inch wafer process from 8-inch wafer process to boost cost and energy efficiency; TSMC's capacity utilization ratio and profitability will further climb along with foundry technology switching to 16nm process from 20nm process; and the foundry giant's customers will not build inventories until the end of the final quarter or the first quarter next year after two quarters of inventory adjustments.

The recent sale of 82 million shares in Vanguard International Semiconductor Corp. (VIS) for around NT$3.88 billion (US$125.16 million) will also contribute to TSMC's profit this year. After the sale, the company still has 28.3 percent stake in VIS, a specialty IC foundry supplier.

Industry In-Focus

SINOSTEEL Corporation: Rising price in Steel</h2>

SINOSTEEL Corporation: Rising price in Steel

Jun 05, 2020

Brazil’s new crown pneumonia epidemic has rapidly increased. Brazil’s Vale, the world’s largest iron ore producer, is facing an out-of-control impact. The market is worried that iron ore production and sales will be affected. new highs. Experts from Sinosteel (2002) evaluated that steel prices will rise steadily under the effect of rising costs, with a promising outlook. According to a legal p...

Apple Invests Millions in LED Plant in Taiwan</h2>

Apple Invests Millions in LED Plant in Taiwan

Jun 01, 2020

Apple is considering to invest over US$330 million in a factory in northern Taiwan to manufacture both LED and micro-LED displays for its iPhones, iPads, MacBooks, and other new devices. Apple is teaming up on the new factory with Epistar, Taiwan's top LED producer, and Taiwanese LCD panel maker, AU Optronics. The plant will be located in the Longtan branch of the Hsinchu Science Park and Appl...

Taiwan Machinery Was Applauded in COVID-19</h2>

Taiwan Machinery Was Applauded in COVID-19

May 18, 2020

What the epidemic showed was the amazing flexibility of Taiwan's machine tool industry. Taiwan, which has allowed the semiconductor industry to specialize in the past, has finally realized that these machine tool industries with amazing strength are the "invisible champions" of Taiwan's economy. In early February, three companies -- Habor Precision, Tongtai Machine & Tool and Taiwan Takisawa -...

Industry Reports

K, the leading global plastic and rubber trade fair (Photo courtesy of Messe Düsseldorf/ctillmann)

K, The World's Leading Trade Fair for Plastic and Rubber Industry

Jul 24, 2020

2019 K Show, the leading global trade fair for the plastics and rubber industry, had been held in Düsseldorf on 16-23 October, 2019. There were 3,330 exhibitors from 63 nations proved impressively: plastics continue to be an innovative, indispensable material. But they also unanimously underscored the necessity of having operational circular economies along the complete material chain and to this...

Photo courtesy of CENS

Digital Healthcare & Technology at the Heart of Las Vegas CES 2020

Jul 14, 2020

■ Hubert Chih The number of healthcare exhibitors at the 2020 CES in Las Vegas increased significantly by 23% from 2019. According to the analysis and report by the CES organizer, digital healthcare and technology were the focus in the healthcare exhibition. In addition to the continued expansion of healthcare coverage, the reduction of healthcare costs, the improvement of effectiveness and th...

The Taiwan Hardware Show sees global buyer attendance. (Photo provided by Kaigo Co.)

Taiwan's Hand Tools Seeking Opportunities Amid Global Crisis

Jul 10, 2020

Due to the COVID-19 pandemic sweeping the globe, most of the international hardware shows slated for this year has been moved to 2021. However, as Taiwan’s efforts combating the new virus has proven to be successful, the 2020 Taiwan Hardware Show (THS) will continue as scheduled, beginning on Oct. 13 and ending on the 15th at the Taichung International Exhibition Center, thus becoming the only sh...

Supplier News

With professional technics and rigorous quality control, Kung Hsing gains high-reputation in the industry</h2>

With professional technics and rigorous quality control, Kung Hsing gains high-reputation in the industry

Jul 23, 2020

Kung Hsing Plastic Machinery Co., LTD., founded in 1972, is the brainchild of the company President Tsai Chin-lien’s over 48 years of experience in designing and producing extrusion machines. The firm stood by its belief to uphold integrity and offer the best quality and services, eventually becoming a leader in the extrusion machinery industry in Taiwan. Kung Hsing currently has two factories; t...




Jul 21, 2020

■ Tseng Lung-nan Intype Enterprise has built up 55 years of experience in producing extruders, though the firm is placing greater consideration on rapidly degrading of the global environment. In the past 20 years, Intype has become an active contributor to building up a global ecosystem, enabling them to reuse the products manufactured by their own extruders and avoid further waste. The firm t...


YFCM Carbon Fiber Driveshaft Lauded in the field of Modified Cars for its Flexibility </h2>

YFCM Carbon Fiber Driveshaft Lauded in the field of Modified Cars for its Flexibility

Jul 14, 2020

■Hsiao Yung-le Yifeng Technology Co., Ltd. specializes in the research and development of carbon fiber transmission shafts and the manufacture of carbon fiber related products.The carbon fiber material has the characteristics of lightweight, impact resistance, fatigue resistance, and corrosion, and chemical stability is quite high. The product type is increasing in the extensive range with an ...


Insiders' Views

Caption: Pictured from front row, third right, Changhua County Government Economic Affairs Department Director Liu Yu-ping, County Magistrate Wang Huei-mei, Secretary Chen Bo-tsun pose in front of the exhibition booth. (Photo provided by CHCIA)

Changhua County Government Shores up Biz-Matching to Global Buyers

Nov 18, 2019

■Yang Feng-Chun In a bid to assist manufacturers in Changhua County to expand their market reach overseas against severe competition in the globalized market, Changhua County Government has been an active player in pushing for a makeover and innovation of its local small and medium-sized enterprises. This is done in hopes of establishing stronger connection with international markets. An ex...

Paul Master offers high-quality chassis and engines parts for passenger cars, trucks, and industrial trucks. (Photo courtesy of Paul Master)

Paul Master Builds Reputation with Auto Chassis and Engine Parts

Nov 18, 2019

Founded in 1980, Paul Master Auto Parts Co. is headquartered in Taiwan, a professional manufacturer of chassis and engines parts for passenger cars, trucks, and industrial trucks including forklifts. General Manager Terry Liang said the company has its own professional design department, which provides customized products and specifications for global buyers, including automobile steering and...


Nan Hoang Traffic Instrument Co., Ltd.</h2><p class='subtitle'>Taiwan First brakes Technology Co., Ltd. </p>

Nan Hoang Traffic Instrument Co., Ltd.

Taiwan First brakes Technology Co., Ltd.

Sep 04, 2019

Nan Hoang Traffic Instrument Co., Ltd is one of the major manufacturers of automobile friction materials in Taiwan and globally. Chairman Austin Cheng has implemented the double-arrow strategy this year - own brand of “YangPo” is adopted to focus on global channels while the “NHC brand focuses on improving market shares in global markets, such as Europe, America, Asia, Australia, and the Middle E...

Exhibition Highlights

Koelnmesse (Beijing) Co., Ltd.

Announcement on Postponement of China International Hardware Show 2020 (CIHS 2020)

Jul 10, 2020

In view of the continuous spreading of COVID-19 all over the world and the latest epidemic prevention requirements of China and the government of Shanghai, in order to guarantee the health and safety of exhibitors, purchasers and professional visitors, China National Hardware Association and Koelnmesse have prudently decided to postpone China International Hardware Show 2020 (CIHS 2020) from Augu...

Automechanika Shanghai 2020 creates channels for cross-sector collaboration</h2>

Automechanika Shanghai 2020 creates channels for cross-sector collaboration

Jun 16, 2020

This year, Automechanika Shanghai continues to serve the entire automotive value chain by offering opportunities for information exchange, marketing, trade and education. Both vertically and horizontally, from OE, vehicle production to the aftermarket, it incorporates all elements of manufacturing, supply networks, services, new business models and information technology. Companies across the...

Messe Frankfurt (Shanghai) Co Ltd

CAPAS defers to 2021

Apr 20, 2020

Following the Chinese Government’s initiatives to prevent and control the COVID-19 outbreak, the organisers of the Chengdu International Trade Fair for Automotive Parts and Aftermarket Services (CAPAS) have announced the defer of the show’s 2020 edition. The fair, originally scheduled from 21 to 23 May 2020, will now be held from 20 to 22 May 2021. In China, the State Council issued an announc...