TSMC has earned higher revenues from consumer and professional chips in the HPC (High-Performance Computing) market segment than those intended for smartphones for the first time in what seems like an eternity.
The difference wasn’t huge, with HPC accounting for 41% of the company’s revenue, compared to 40% of the smartphone market. What the 41% HPC contribution “hides” from the overall picture are TSMC’s HPC profitability explosion: the segment’s revenues increased by 26% sequentially. HPC was a major contributor to TSMC’s outstanding financial performance in the first quarter of the year, allowing it to outperform guidance on all key parameters.
In the first quarter of 2022, TSMC’s HPC chip orders produced revenue of $6.8 billion, up from $4.3 billion in the previous quarter. Considering the sluggish smartphone market, TSMC is counting on HPC as the driving factor behind its 2022 growth ambitions, powered mostly by the growing importance of the AI, data centre, and supercomputing markets, which follows the consumer electronics boom that followed the COVID-19 epidemic.
The Taiwanese industry-leading production processes, particularly it’s advanced packaging capabilities, are providing the proverbial fuel to the fire in terms of HPC sales. Customers have already placed large orders for HPC chips using the company’s 3D SoIC (system-on-integrated chips) packaging technology, as traditional monolithic chip production is definitely on its way out. With the exception of a few very particular circumstances, such as Cerebra’s Wafer Scale Engine, chipsets appear to be today’s best bet for the future (WSE).
AMD, whose ultra-competitive Epyc CPUs are fabbed at the former’s plants and are utilised to operate those factories, walk hand-in-hand with TSMC. TSMC’s production capacity is used by companies at the forefront of HPC innovation, such as Cerebra WSE and Altera’s Altra Max devices.
Intel has now become a customer of its rival TSMC
Intel’s production troubles may have paved the way for AMD — and, maybe, more importantly, Arm-based processors — to enter the HPC market, where TSMC’s technological superiority is unavoidable for such high-impact market shifts. The success of TSMC’s customers literally makes (or breaks) the company. For its discrete GPU products, TSMC now counts Intel among its customers.
Interestingly, TSMC’s automotive revenue for the first quarter of 2022 climbed by 26% over the previous quarter. The surge in demand from the automotive market is most likely due to the fast-growing global fleet of electric vehicles’ increasing modernisation and chip requirements. Despite this, automobile sales accounted for only 5% of the company’s total income.
Of course, smartphones will continue to contribute considerably to TSMC’s bottom line, and any technological shift to whatever the next big thing is (which some attribute to AR [Augmented Reality] devices) will not happen overnight. Apple’s iPhone and iPad orders alone are expected to contribute $17 billion to the company’s predicted $68 billion in revenue in 2022. Still, the smartphone chip’s reign of terror may be coming to an end, at least for the time being.
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