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Wafer foundry leader TSMC held the first quarter conference of 2020 on the 16th. Originally, due to the new corona pneumonia epidemic, which continued to trample the world economy, along with frequent news from large US and Chinese customers cutting requests, foreign companies sang the future prospects of the company. It is even estimated that this year’s capital spending will be revised downward by more than 20%, and negative rumors in the investment circle are very popular.
However, the TSMC offered an optimistic view that exceeded market expectations: this year, the $ 15 billion to $ 16 billion capital spending plan will remain unchanged, and annual revenue will increase by 15% to 18% compared to last year. “Guo Shen Mountain” will not be shaken so easily. After all, what kind of information does this French statement reveal? Why can TSMC stand alone in the face of adversity?
Advanced advantages of the process
The new coronary pneumonia has continued to burn from China to Europe and the United States. So far, there have been no signs of the end of the epidemic. The final consumer market has been blowing cold winds and the impact on the global industry has continued to expand. International research organizations have also warned and revised downward their economic outlook for this year, and the semiconductor industry has grown 7-10% of its original expected annual growth rate, reversing a single-digit annual decline. .
Faced with this severe challenge, investors are very concerned: the current TSMC law will follow Daliguang and unveil a more pessimistic view. The average expectation from the foreign investment circle is that the company’s revenue will drop by 4-5% in the quarter, and some pessimists believe it will drop to 10% suddenly. In terms of capital expenditures, the epidemic situation may affect the construction of production capacity. 10-20%.
Unexpectedly, TSMC once again demonstrated the dominant “protection of the country’s mountains” and slapped the air force forcefully. In the first quarter, EPS reached a record 4.51 yuan; The company also announced its fiscal forecast for the second quarter of 2020, with an estimate of NT $ 30 to US $ 1, and a quarterly revenue estimate of US $ 10.10-10 billion (approximately NT $ 3,030 ~ (312 billion yuan), the gross profit margin is between 50-52%, and the profit margin is between 39-41%, which are much better than market expectations.
With terminal consumer confidence shaken, why is TSMC still stable? Wei Zhejia, President of TSMC, said at the meeting: “We are the leader of the cutting-edge process. Our 5nm and 7nm” acceleration “process is very fluid and widely used by customers. The industry is small.
TSMC also emphasized again that the contribution of 5 nanometers will be greater than that of 7 nanometers and that the “cycle time” is also very good. The share of income in 2020 is expected to be almost 10%. 3 In terms of nanometers, after considering efficiency and overall cost, it was decided to adopt the FINFET process (fin field effect transistor). It is expected to be experimentally produced in 2021 and mass produced in 2022. Currently, the 2-nanometer technology has yet to be determined.
The demand for HPC products is increasing
Another reason is that the epidemic has changed the way people live and work. Many people have to work and take lessons from a distance at home, leading to increased demand for high-speed computing (HPC) related products. TSMC said it now sees that HPC demand is stronger than in 3 months, which may offset lower demand for smartphones.
Currently, TSMC’s main HPC customers are AMD and Xilinx. TSMC helped AMD build Ryzen processors and EPYC server processors with a 7-nanometer process last year, which has received high praise in the market and also helped customers gain more market share. The market estimates that AMD’s share of the PC market in 2020 is expected to exceed 20%.
Supermicro noted at the annual investor meeting on March 5 that the company plans to launch the first batch of next-generation “Zen 3” core-based processors by the end of 2020. The Zen 4 core is in the design and objective is to adopt advanced 5nm process technology. For TSMC, AMD’s big order has been firmly in hand.
Furthermore, the continued rollout of 5G is also a major growth driver for TSMC. The company predicts that global smartphone shipments in 2020 will be estimated at a high single-digit decline (high single-digit decline); and the penetration rate of 5G mobile phones will remain unchanged at 15% (penetration in mid-adolescence). When the legal person asked about the 5G mobile phone lawsuit, Wei Zhejia replied with a smile: “Very, very popular.”
Capital expenditures
Looking back at capital spending, at the time the epidemic is at its peak, no matter if the world’s big or small companies are cutting their diets and streamlining their spending, TSMC still maintains its capital spending plan of 15 -15 billion dollars this year. Long-term trends, like 5G, will continue to implement advanced processes.
In response to the problem of delayed entry of equipment into the market, Wei Zhejia admitted that due to the impact of the epidemic, the current delivery time for equipment and materials will be delayed from two weeks to one month. In terms of years, it does not affect the plan for capacity development.
Industry experts further analyzed that the key semiconductor equipment is from abroad, and takes a long time from order to delivery.For example, the EUV extreme ultraviolet lithography machine produced exclusively by ASME ASML, takes about a year and a half from order to delivery. So if TSMC is optimistic about the explosive growth in demand for 5G and other devices after 2021, now is the time to continue buying equipment – after all, advanced process competition will be disputed every second and will not be delayed. significantly due to the impact of the brief epidemic.
In fact, this is not the first time that TSMC has gone against the trend. Looking back on the glorious 28 nanometer era, when global companies were still embroiled in the damage caused by the financial tsunami between 2009 and 2010, they did not dare to act rashly. At that time, the company invested boldly. It is more than double the 96.468 billion yuan in 2009, creating one of the most profitable generations of processes in the company’s history.
TSMC’s 28 nanometers were mass-produced in 2011, and the process contributed $ 150 million (about NT $ 4.3 billion at the current exchange rate); in 2014, TSMC’s revenues exceeded NT $ 750 billion, an increase of 28% from 2013 AND 28 nanometers accounted for more than 30% of revenues, and the company’s market share in the global wafer casting market also it increased from 45% in 2009 to over 50%.
And TSMC continues to expand advanced process design, but it also allows related equipment to swallow the heart. For example, Hantang, a clean room contractor, Fanxuan, a peripheral systems provider, and Shihe, a major equipment cleaning company; Shengyang Ban and Zhongsha, a recovered wafer factory; EUV mask box supplier, Taiwan mask mask manufacturer etc.
TSMC’s performance this year is estimated to increase by more than 15% annually and is expected to hit a record for 11 years.
Current TSMC law says it will revise the semiconductor output value (excluding memory) in 2020 to a flat or slight decrease, while the smelter’s output value is estimated to increase from a single high digit to a low percentage. double-digit, which is about 7-12%, and the company will be better than the industry average. TSMC believes that if the epidemic can stabilize in June, the company’s performance is expected to grow by 15-18% (medium to high teens) this year; Although lower than expectations for January, the growth momentum is still quite strong.
Zhang Zhongmou, the founder of TSMC, once publicly shared his views on the outbreak. He believes that this outbreak is a bit like a war and has a huge impact on the economy. After that, people’s lifestyles will also change. This paragraph corresponds to TSMC, which provides opportunities. Although the decrease in demand for smartphones temporarily affects the company’s operations, it also creates more opportunities for the growth of the company due to the change in people’s lifestyles (home work / class).
Most importantly, TSMC has continued to invest in advanced processes due to short-term epidemic disruptions, especially when the economy is uncertain, but this is an excellent opportunity to widen the gap between its competitors. China and China should take advantage of the situation to build a wider moat so that their adversaries cannot invade the city and can stabilize.
(This article is reproduced with permission from MoneyDJ News; the source of the first image: Science and Technology News)
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