TSMC Don’t Gain Wafer OEM Order Transferred From Samsung in The Short Term
In a joint interview with the media on the July 18th, Taiwan semiconductor manufacturing co., LTD. (TSMC) denied rumors that it would get more Wafer OEM orders transferred from Samsung due to Japan’s export control on semiconductor raw material. At present, TSMC don’t receive order because it will take far more than three months for South Korean customer to decide whether to change supplier.
When asked about impact of trade war between Japan and South Korea, He Limei, senior deputy manager and CFO of TSMC, expressed that it is difficult to judge on account of too many variables involved. In regard to the switching effect of TSMC benefitting from the trade war between Japan and South Korea, She highlighted that customers would not immediately transfer supplier owing to long decision-making process. Therefore, there will be no transfer of order in the short term. In the long run, it depends on how long the trade war lasts. As for the current supply situation of Huawei, she pointed out that everything is normal.
The results of the second quarter in 2019 are better than expected with the gross profit margin increasing compared with the first quarter. He Limei attribute it to the improvement of capacity utilization. CEO Wei Zhejia stated that the global semiconductor industry growth rate and wafer foundry industry would decline by 3% and 1% respectively in 2019. While He Limei reiterated that TSMC's full-year revenue will outperform the industry on the condition that the third quarter is expected to be better than the second quarter and the second half of 2019 is expected to be better than the same period in 2018. The extent of performance is expected to be revealed at the q3 conference in October.
TSMC expects revenue will reach $9.1 billion to $9.2 billion in the third quarter of 2019, up 17 % to 18 % from the first quarter, and gross margin reach 46 % to 48 %. In response, she said the third quarter will see growth across platforms including smartphones, high-performance computing, the Internet of things and vehicles. Among them, the smartphone platform growth is the strongest and the Internet of things will also be strong growth. Moreover, the strong growth trend will continue into the fourth quarter of 2019, making the fourth quarter of revenue is expected to be better than the third quarter.
He Limei pointed out that capital spending in 2019 was expected to be between $10 billion and $11 billion. 5nm production by 2020 is just around the corner and demand for the relevant 5G market is increasing. TSMC find current market demand is strong so the relevant mass production schedule will be slightly advanced, which means that some equipment will be shipped to the installation in advance. Therefore, relevant capital expenditure will increase in 2019 slightly.
He Limei is still confident about TSMC's technology as it competes with rivals in the 5-nanometer segment. TSMC has made progress from 10nm to 7nm, and now to 5 nm, of which each is a full-node improvement. It has a small improvement but it makes a big difference compared with competitor.