TSMC Foresees Double-Digit Sales Growth as iPhone X Hits Shelves

TSMC forecast 11 to 12 percent growth in revenue in the holiday quarter, when Apple’s much-anticipated iPhone X goes on sale, according to Bloomberg.

Their technological edge and its role as the main chip supplier to Apple is helping it weather poor smartphone demand globally. The world’s largest producer of made-to-order microchips is predicting revenue of $9.1 billion to $9.2 billion in the December quarter, in line with projections for about $9.15 billion.

That forecast came after TSMC posted a narrower-than-expected 7 percent decline in profit. The Taiwanese giant, which had reported three consecutive months of sales declines, is one of the industry’s most cost-effective chip producers and has steadily gained market share at the expense of smaller rivals.

It’s preparing to spend more than $20 billion on its next state-of-the-art plant as it’s built out in coming years: the price for staying ahead of Intel and Samsung in cutting-edge production. TSMC spends $10 billion annually to stay abreast of rivals, but the cost of safeguarding its perch as the predominant player in bespoke semiconductors is soaring as chipmaking gets increasingly intricate. Founder Morris Chang said this month TSMC may have to bump its annual outlay up to as high as $11 billion.

Globally, demand for smartphones remains tepid. Investors had counted on a flurry of orders as Apple’s latest device prepared to hit store shelves, but early indications are that many consumers chose instead to wait it out for the more distinctive iPhone X. The U.S. company is TSMC’s biggest customer, accounting for more than 15 percent of revenue, according to data compiled by Bloomberg. Credit Suisse trimmed its estimate on TSMC’s 2018 sales by about 1.2 percent, citing lower expectations on iPhones.

TSMC reported a net income of NT$89.9 billion ($3 billion) in the September quarter, compared with the NT$87.7 billion projected. The company is now racing to meet the future demand it anticipates from computers and connected devices in the so-called Internet of Things, from cars to home appliances and voice-activated speakers.