During a period of time when most corporations are struggling to get by, TSMC, the world’s largest contract chip manufacturer, has managed to almost double its Q1 year-on-year profit in 2020. A surge in the demand for PC and server semiconductors and data communications equipment platforms helped the corporation to maintain profit growth. An increasing number of employees working from home requiring server access and personal computers is thought to have been a major contributor for growth during this period.
TSMC expects the demand for semiconductors to reduce from smartphone vendors, automotive manufacturers as a consequence of the COVID-19 pandemic. However, the company also expects High Performance Computer (HPC) and IoT to withstand pressures exerted from COVID-19 and maintain strong demand. Demand for these products is unlikely to be continuous throughout the year and the groups expectations rely on the pandemic being under control by H2 2020 which is still uncertain. The global market is a primary consumer of TSMC products, the group hoped 5G deployment would help increase sales in 2020 but delays across Europe and the US could hurt the company’s predictions.
competition from China’s semiconductor industry also poses a threat to TSMC
financial performance in 2020. China is accelerating the development of its
technology industry including its integrated device manufacturer (IDM)
semiconductor foundries. This is creating additional competition for TSMC in
one of its major markets which could damage its financial predictions for the
year. The group is already losing its grip on the country’s largest smartphone
manufacturer, Huawei Technologies, while China continues to attract Taiwan’s
top semiconductor talent with attractive salaries and bonuses which could have
an impact on domestic operations.