TSMC Profit Beats Estimates as Mobile Chip Demand Rises

TSMC Profit Beats Estimates as Mobile Chip Demand Rises
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TSMC posted better-than-projected quarterly earnings, fueled by increasing demand for high-end microchips from biggest customer Apple as well as up-and-coming Chinese smartphone makers, according to Bloomberg. The world’s largest contract chipmaker also forecast revenue slightly below analysts’ estimates for the current quarter.

Chairman Morris Chang, addressing investors after the earnings release, voiced support for U.S. President-elect Donald Trump’s effort to create American jobs, saying TSMC had done its share over past decades to support U.S. employment by providing chip-making to that country’s firms.

TSMC, which builds the processors for Apple and Qualcomm that end up in smartphones, has grown its share of the iPhone business and benefited from growing demand from Chinese companies such as Oppo and Xiaomi. Resilient demand for premium devices and new applications within areas such as artificial intelligence, datacenters and high-performance computing boosted the company’s business in 2016.

“TSMC actually created hundreds of thousands of U.S. jobs in the past 20 or 30 years,“ said Chang. The company will continue to work with so-called fabless companies, he said, referring to the designers and owners of microchip technology like Apple or Qualcomm. The Taiwanese company reported a record net income of $3.15 billion in the three months ended December, surpassing average of analysts’ estimates.

Chang told investors he foresees revenue growth for TSMC of 5 to 10 percent in 2017 in dollar terms. Global smartphone shipments could rise 6 percent this year to about 1.5 billion units, bouncing back from last year’s near-flat performance but lagging by far the 24 percent growth of 2014, according to research firm Canalys. In that environment, high-end component makers will be better positioned in 2017.