The Taiwan Semiconductor Manufacturing Firm (TSMC) saw substantial revenue growth in December 2021, the company announced earlier today after releasing its monthly sales results.
These figures contradict reports that said possible order cuts from the company’s smartphone industry customers could hurt revenue growth in the fourth quarter of last year, with sources speculating that inventory corrections for semiconductors could cause companies to reduce their procurement from the world’s leading contract chip manufacturer.
The revenue data for December show that the Taiwanese fab generated NT$155 billion in revenue as the year came to a close. As a result, December was TSMC’s best month in terms of net sales last year, surpassing the previous high of NT$153 million set after the year’s third quarter in September.
In terms of revenue growth, December was TSMC’s highest month in 2021, with an annual revenue increase of 32.5 percent, which highlighted the off-seasonal nature of the surge, since the September data, while similar, were marked for roughly 20% growth. The corporation reported a 14 percent gain in December 2021, more than double its annual growth.
The data for last month also provide us a glance at TSMC’s performance in 2021, with the company bringing in NT$1.59 trillion in net revenue by the end of the year. This allowed the chipmaker to finish the year with a 19 percent increase in revenue, a slower rate of growth than the projected 25 percent growth for 2020.
As demand for consumer electronics increased and automotive manufacturers rushed to book chip manufacturing capacity to accommodate earlier order cutbacks that were based on incorrect assumptions about the global economic recovery, technology, and other firms flocked to TSMC and increased their orders.
Furthermore, and perhaps more importantly, the December revenue rise should be compared to a report from last year that said that some of TSMC’s smartphone customers were looking to reduce their orders owing to a rumored semiconductor inventory correction.
According to a September report originating in Taiwan and citing American investors, Apple and MediaTek were cutting orders for their 5-nanometer smartphone processors and 7-nanometer 5G modems, respectively, lowering TSMC’s projected revenue growth for the fourth quarter by 5% from the previous estimate of 10%.
The actual growth rates for the fourth quarters of 2020 and 2021 are 14 percent and 21 percent, respectively, demonstrating that by the end of 2021, TSMC has increased its growth by seven percentage points above Q4 2020. The December results had a big part in the extra percentage points because else yearly fourth-quarter revenue increase would have been flat between the two years.
If instead of growing revenue by 32 percent in December 2021, TSMC had grown revenue by 15 percent, the quarterly growth would have been around 16 percent, with only a 2 percent increase over the previous year’s fourth quarter.
TSMC’s yearly revenue growth is also slowing as it expands its operating scope, despite the good December performance. According to data from 2020, the company increased sales by 25% by the end of the year, compared to 19% at the end of the previous year. TSMC achieved NT$1.3 trillion in sales for the entire year of 2020.
Analysts will be watching for capital expenditure announcements when the fab releases its earnings for the preceding quarter and full-year 2021 later this week. In general, these are expected to increase dramatically as TSMC considers extending its production footprint due to capacity constraints in 2021 and escalating semiconductor demand.
also read:
