Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker, saw its share price soar to a record high on rising global demand for electronics and a reported delay in production by its rival Intel.
The company known better as TSMC reached a market cap of more than $410 billion on Tuesday morning, according to Bloomberg. Shares rose by the maximum 10% on Tuesday to a high of TW$466.5 ($15.8) in early trading before paring back the gains to close at TW$435.
Working and studying from home exploded this year as lock downs and travel restrictions were implemented in parts of the world hit by the Covid-19 outbreak. The trend has brought a surge of orders for consumer electronics, such as PCs, that run on semiconductors.
Global consumer electronics sold through e-commerce will grow from $282.6 billion last year to $373.6 billion this year following a “surge due to purchase of electronic products that support work from home,” ResearchAndMarkets.com forecasts.
“The electronics sector in general is doing really well, and this will have boosted demand for TSMC’s products,” says Gareth Leather, senior emerging Asia economist with Capital Economics in London. He notes “strong demand” for telework gear.
TSMC has paced or exceeded its peers by advancing the chip production process so processors run faster and on less power.
In the second quarter, TSMC’s shipments of chips produced with the relatively advanced 7nm process accounted for 36% of its total semiconductor revenue. Advanced technologies, defined as 16nm or smaller, accounted for 54% of total wafer revenue, the company said. Smaller nm (nanometer) numbers represent more advanced production.
Intel’s statemnt earlier this month that its 7nm products would be delayed another year benefits TSMC as well, says Yao Tse-yong, a former buy-side analyst who follows TSMC. AMD, a rival microprocessor seller to Intel, would pick up the slack for now and hire TSMC to make its chips, he says.
TSMC had announced last week a 28.9% year-on-year revenue gain in the second quarter, leaving it NT$310.7 billion ($10.6 billion) in consolidated revenue. Second-quarter net income of NT$120.8 billion handed TSMC a 38.9% net profit margin year on year and a 3.3% jump between the first and second quarters.
From now through September, TSMC expects to see rising demand for 5G mobile gear and high-performance computing applications. It expects third-quarter revenue between $11.2 billion and $11.5 billion.
“Moving into third quarter 2020, we expect our business to be supported by strong demand for our industry-leading 5nm and 7nm technologies,” Chief Financial Officer Wendell Huang said in the second-quarter revenue announcement.
TSMC was founded in 1987 by billionaire Morris Chang. According to market research firm TrendForce, TSMC and Samsung are the world’s two largest companies in semiconductors with roughly 50% and 18% market shares, respectively.