The lure of bitcoin could send TSMC off course. Surging demand for processors used in creating digital tokens has boosted results at the world’s largest contract chipmaker. That helps make TSMC less dependent on handsets. When the $210 billion behemoth plans future investment, though, placing big bets on crypto-currencies would be foolish.
Bitcoin mining has been pushing the growth of important chipmakers, such as Nvidia and Advanced Micro Devices Inc.(AMD). Now, tech giant Taiwan Semiconductor Manufacturing Co Ltd., the world’s largest contract chipmaker by market share and a key supplier to Apple, plans to significantly increase its revenue from the crypto-mining devices segment.
TSMC has been the sole manufacturer of core processors for Apple’s iPhones since 2016 and will continue to monopolize those orders this year.
Speaking to investors during an earnings conference call, TSMC reported its Q4 2017 earnings, showing a 10.1% increase in revenue and a 10.4% increase in net income. In total, the Q4 revenue was $9.21 billion, which increased 10.7% from the previous quarter and 11.6% year-over-year. The TSMC stock rose 2.69% in response.
Manufacturing for mobile devices makes up a considerable amount of TSMC’s revenue, reportedly accounting for half of the 977.45 billion New Taiwan dollars ($33 billion) it earned in 2017. For 2018, TSMC believes it will have a strong year despite the supposedly weakening mobile market, and expects revenue growth of between 10 and 15 percent.
Rather than from the mobile market, TSMC’s revenue growth may come from its other businesses interests, including the cryptocurrency mining industry, and the increased use of AI applications in data centers and in electronic devices.
In 2017, the biggest chipmakers such as Nvidia, AMD, and other manufacturers of electronic components fared well. They continued to profit from manufacturing devices used in cryptocurrency mining, IoT, artificial intelligence, robots, driverless cars, and other Fourth Industrial Revolution innovations.
On the cryptocurrency side, the Beijing-based Bitmain has become one of TSMC’s best clients since the second half of 2017. The firm specializes in bitcoin mining chips and solutions, and generated $350 million to $400 million of revenue from this sector in the third quarter alone, co-Chief Executive Officer Mark Liu told investors. That’s about 4 to 5 percent of the period’s revenue, according to Bloomberg’s calculations.