Chip manufacturing giant Taiwan Semiconductor Manufacturing Co (TSMC) reported an increase in its revenues for the first quarter of this year, citing an increased demand for smartphones as the main contributor to its growth. Spurred by its performance, the company is pushing ahead with its aggressive capital investment plans for 2020.
The company's performance, often regarded as a barometer for the entire tech industry, had lowered its overall revenue outlook for the rest of the year by a few percentage points. TSMC expects that the ongoing coronavirus pandemic will have an adverse effect on its supply chains in the coming quarters, leading to slightly lowered revenues.
Overall, the company expects growth in the coming quarters given the robust demand for semiconductors from data centers and components from electronics manufacturers. The expected surge in demand is being attributed to the unprecedented increase in online activity and gadget usage due to the ongoing lockdown and stay-in-place orders imposed by governments worldwide.
TSMC is a major chip supplier to tech giants such as Huawei Technologies and Apple. Like other tech companies, TSMC is relatively more resistant to the economic downturn as it does hold a major position in the global production of high-end chips, for now, in-demand businesses such as data centers, video streaming, video games, and consumer electronics. In March, Apple had reported a 19 percent surge in iPhone shipments to Chian. This suggested that demand for electronics is bouncing back.
For the first quarter, TSMC reported a 42 percent increase in its revenues to $10.33 billion. Net income for the quarter ending in March nearly doubled when compared to the previous quarter to around $3.9 billion. TSMC stated on Thursday that the demand for advanced silicon products had remained steady despite the coronavirus pandemic.
The world's largest chipmaker issued a forecast for its second quarter, stating that it expects revenues of between $10.1 billion and $10.4 billion for the April to June quarter. TSMC chief executive officer, C.C. Wei, mentioned during the company's conference call that their conservative forecasts for the coming quarters are based on the fact that end-demand for their products could be impacted by the pandemic throughout the second half of the year.
Despite the conservative forecasts, TSMC stated on Thursday that it will still be adhering to their initial plans, which will include allocating $15 billion to $16 billion for capital spending for 2020. The amount is slightly higher than the company's $14.9 billion budget last year.
