TSMC Cuts Revenue Forecast Due to Weak Demand For Crypto Miners

Taiwan’s microchip producing giant TSMC recently decreased its annual revenue and capital expenditure estimates after growth rate reduction in the smartphone and crypto mining industries.

Taiwan Semiconductor Manufacturing Company, Limited (TSMC) also known as Taiwan Semiconductor, is the world's largest dedicated independent semiconductor foundry, with its headquarters and main operations located in the Hsinchu Science and Industrial Park in Hsinchu, Taiwan. Founded in Taiwan in 1987 by Morris Chang, TSMC was the world's first dedicated semiconductor foundry and has long been the leading company in its field. In addition to semiconductors, the company has also begun investing in lighting and solar energy-related industries. They produce chips for tech giants like Nvidia Corp., Apple Inc., and Qualcomm Inc.

It's already lowered 2018 revenue growth forecast had trimmed its expected capex to US$10-10.5 billion from US$11.5-12 billion. For the April-June quarter, TSMC reported a 9 percent rise in net profit from a year earlier to NT$72.29 billion (S$3.2 billion), in line with market estimates, on strong demand for high-end chips used in cryptocurrency mining.

Sales to the personal computer industry accounted for 21 percent of total revenue, from 8 percent a year prior, while revenue from the communications sector that includes smartphones fell to 48 percent from 58 percent.

Notably,  the price of specialized GPUs has been declining along with sinking prices in digital currency markets. While at the end of 2017 and beginning of 2018 cryptocurrency mining caused a sharp rise in the price of high-end graphics cards, the tendency seems to have reversed as crypto markets sloped downward.

The firm could face slowing demand for high-end chips used in cryptocurrency mining as miners switch to lower-powered chips due to price volatility as well as increased regulatory scrutiny of the sector.

The ongoing trade war between the United States and China could also be a near-term risk for TSMC, which has many of its biggest clients in mainland China. Revenue from China jumped to 23 percent from 11 percent a year earlier, though North America remains its biggest market with 53 percent of total revenue, down from 59 percent.

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