The world is still hungry for chips – TSMC revenue spikes

Despite the world seeing record high inflation due to skyrocketing energy prices, economies flooded with cash from government spending during the global pandemic and worsening market conditions, demand for electronics is holding up better than expected. The world’s largest chip maker, Taiwan’s TSMC, has reported knock-out Q2 revenue even with concerns about muted demand persisting.

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TSMC reported NT$534.1-billion (US$17.9-billion) of revenue for the second quarter, compared to the average analysts’ estimate of NT$519-billion. The entire semiconductor industry is valued at around $550 billion per year, and these latest results have allayed investors’ fears that demand would slow down due to economic slowdowns around the world.

The Taiwanese chip maker is Apple’s most important chip supplier, making the A-series Bionic chips for the Cupertino firm’s flagship device – the iPhone. Impressively, this massive bump in Q2 revenue is without the inclusion of Apple’s latest iPhone chip, with production only ramping up in Q3 to ready the launch of the iPhone 14 in September.

TSMC isn’t the only chip manufacturer that is showing impressive growth. Samsung Electronics also reported a better-than-anticipated 21% jump in revenue, with better than expected silicon sales. Of course, there are still concerns that this growth will slow down as the entire world is on the precipice of damaging recession.

“TSMC’s second quarter sales are slightly lower than the most recent market expectations,” Jeff Pu, an analyst with Haitong International Securities said. “But the company’s third quarter revenue may outperform consensus, aided by its price hike and Apple’s new product launch.”

Apple has proved to be TSMC’s most important customer, and the success of the Apple range of products has helped TSMC advance its technology significantly. It now arguably makes the best ARM chipsets in the world, also worrying traditional chip manufacturers like Intel and AMD. TSMC also makes Apple’s new M1 and M2 range of chipsets, which Apple has used to replace Intel chips in its Mac devices.

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