TSMC 2020 revenue jumps thanks to 5G, high-performance computing

Taiwan Semiconductor Manufacturing Co. Ltd.'s 2020 net revenue grew 25.2% year over year, partly driven by its commercialization of a smaller chip, according to a Jan. 14 earnings release.

TSMC's net revenue was NT$1.34 trillion in 2020, compared to NT$1.07 trillion in 2019. The growth was due to strong demand for 5-nanometer chips, "driven by 5G smartphone launches and [high-performance computing]-related applications," CFO Wendell Huang said in an earnings call. Nanometer, or nm, is the unit used to express chip size.

Chips using 5-nm technology accounted for 20% of TSMC's total sales in the quarter ended Dec. 31, 2020, and 8% of 2020 net revenue. TSMC started to commercialize 5-nm chips in the September quarter. Revenue from 7-nm products made up 29% of the fourth-quarter total, and 33% of the 2020 total.

Platform-wise, some 33% of 2020 net revenue came from high-performance computing, or HPC, products, compared to 30% in 2019. Smartphone orders accounted for 48% of total revenue in 2020, compared to 49% in 2019. Sales of internet of things, automotive and other products were flat on 2019.

Looking at the first three months of 2021, revenues from HPC, automotive and IoT will increase sequentially, while smartphone sales "will experience a milder seasonal decline," Huang said.

North America revenue

TSMC saw revenue from North America account for 73% of the total in the fourth quarter of 2020, compared to 59% year over year. Revenue from China dropped to 6% of the December quarter total, compared to 22% in the same period in 2019.

The company will begin construction on its Arizona factory in 2021, targeting a production capacity of 20,000 wafers per month by 2024, according to Chairman Mark Liu.

TSMC will also increase capacity at its manufacturing facility in the Chinese city of Nanjing, as it expects demand from the country to grow, Liu said.

Full-year net income attributable to shareholders of the parent was NT$517.89 billion, or NT$19.97 per share, up 50% compared to NT$345.26 billion, or NT$13.32 per share, in 2019. The S&P Capital IQ consensus estimate for 2020 GAAP EPS was NT$19.78.

The growth in net income was mainly due to cost control, which helped offset increased capex generated by implementing 5-nm and other technologies.

The company posted NT$361.53 billion net revenue in the December quarter, up 14% year over year from NT$317.24 billion.

Net income attributable to shareholders of the parent was NT$142.77 billion, or NT$5.51 per share, up 23.0% year over year from NT$116.04 billion, or NT$4.47 per share. The S&P Capital IQ consensus estimate for fourth-quarter GAAP EPS was NT$5.27.

As of Jan. 13, US$1 was equivalent to NT$28.02.