Fun with Data - Taiwan Semiconductor
As the world’s largest semiconductor foundry, Taiwan Semiconductor (TSM) is a harbinger of the health of the industry and at the least an anecdotal source of the structural issues that face the industry currently. While we are not going to go into great detail as to the nuance in TSM’s 1Q results, there are some points that should be recognized by investors in the CE space. While sales were up only 1% q/q in US dollars, on a y/y basis they were up 24.7% and continue the trend of expanding semiconductor demand and high utilization that has been seen since 3Q of last year. Aside from the standard rhetoric about the new digital age and seasonality, HPC (High Performance Computing – ASICs, GPUs, and AI processors) continues to grow as a percentage of TSM’s business on a q/q basis, a good portion of which is being driven by crypto-mining, while the smartphone segment seems to be growing, but at a slower space.
Embedded in the HPC gains is the rise in the price of bitcoin, making mining a more lucrative endeavor, but that demand is also competing with demand for graphics components that are actually being used in consumer devices. Most of the other platform categories are seeing modest q/q revenue growth, but when growth on a y/y basis is examined (Fig. 3), slowing smartphone growth is even more pronounced, taking seasonality out of the mix. Here’s what the 1st quarter y/y results looked like by platform for this year and last year.
Embedded in the HPC gains is the rise in the price of bitcoin, making mining a more lucrative endeavor, but that demand is also competing with demand for graphics components that are actually being used in consumer devices. Most of the other platform categories are seeing modest q/q revenue growth, but when growth on a y/y basis is examined (Fig. 3), slowing smartphone growth is even more pronounced, taking seasonality out of the mix. Here’s what the 1st quarter y/y results looked like by platform for this year and last year.
All in, it is difficult to remove the effects of COVID-19 from TSM’s quarterly results, but comparing against the pre-COVID y/y performance does give some indication as to where a longer-term baseline should be drawn for each platform. While automotive is still a relatively small portion of TSM’s wafer business, it seems to be growing more consistently than the others, as the only segment that saw higher y/y growth this year over last year, even considering the constant stories about how foundries have allocated less resources to the automotive space and more to higher margin components, which seem to be primarily in the HPC category. Huawei (pvt) is also a factor in the slower smartphone growth at TSM, but given how strong overall demand has been in recent quarters, the order reductions from Huawei that are a result of US trade restrictions, are likely easily made up by others. More on TSM to follow…
Taiwan Semiconductor Revenue by Platform - Source: SCMR LLC, Company Data
Taiwan Semiconductor Revenue by Platform - Source: SCMR LLC, Company Data
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