According to Korean media BusinessKorea, TSMC, the world’s largest chip foundry, has widened the gap with South Korea’s Samsung Electronics, and it remains to be seen whether Samsung’s “semiconductor Vision 2030 Plan” can be successfully realized.
TSMC said on its official website on September 10 that its sales in August reached 122.9 billion Taiwan dollars. The figure was up 15.8% from a year earlier and 16% from July. In July, its sales fell 12.3% from June.
Previously, TSMC stated at the second-quarter earnings conference that since May, TSMC has not received any new orders from Huawei, and starting September 15, TSMC will not be able to deliver chips to Huawei. Due to a sharp drop in sales in July, industry insiders say U.S. sanctions on Huawei are starting to impact sales of TSMC, which accounts for 14 percent of TSMC’s annual sales.
However, with the rebound in sales in August, some experts said that the impact of US sanctions on Huawei on TSMC’s sales was not as big as initially expected. In the first eight months of this year, TSMC’s cumulative sales reached TWD 850 billion, an increase of 30.7% over the same period in 2019.
Therefore, the decline in TSMC’s sales in July is believed to be due to concerns about a downturn in the semiconductor market in the second half of 2020, while the decline in semiconductor prices has stimulated TSMC’s sales.
TSMC’s rebound in sales in August means that while its supplies to Huawei have ceased since May, the company’s global customer orders have offset Huawei’s impact. Therefore, there is little chance that TSMC’s sales will decline significantly.
Some experts speculate that TSMC’s customers such as Apple, Google, Qualcomm, Nvidia, AMD, etc. have increased their orders to TSMC to establish a more stable relationship with TSMC. In fact, TSMC is expanding its business with major American customers such as AMD and Apple. The ARM-based CPUs on Apple’s new Mac models and the A14 processors on the iPhone 12 are all from TSMC. AMD plans to launch its Zen 3 CPU and Radeon RX6000 GPU series for PCs in October, and production of these products is expected to rely on TSMC.
At the same time, some experts speculate that Huawei’s orders were placed with TSMC through other semiconductor design companies. MediaTek announced that August sales were $32.7 billion. The figure was up 41.9% from the same period in 2019 and 22.5% from July. MediaTek is designing mobile APs and 5G communication modems and outsources production to TSMC.
TSMC appears to be looking for new customers to replace Huawei before U.S. sanctions against Huawei kick in on September 15. However, it remains to be seen whether TSMC’s detour strategy will pay off, given the new tough sanctions announced by the U.S. government in August.
At the same time, people are also paying attention to the trend of Qualcomm. Qualcomm has a strong desire to continue business ties with Huawei and is conducting a vigorous lobbying campaign to win special approval from the U.S. government to export to Huawei. Qualcomm claims that Huawei will eventually be able to source the equipment and components needed to produce 5G smartphones from non-US companies including Samsung Electronics and MediaTek. However, Samsung Electronics will also stop supplying products to Huawei from September 15 due to tougher U.S. sanctions.
IT House learned that Huawei accounts for 6% of Samsung Electronics’ annual sales. On the other hand, TSMC relies on Huawei for 14% of its annual sales.
As TSMC continues to grow despite cutting off deals with Huawei, the challenges facing Samsung Electronics are getting tougher. The South Korean semiconductor giant is promoting the “Semiconductor 2030 Vision” and hopes to become the number one in the system semiconductor market by 2030. Samsung recently won foundry orders from a range of big customers including IBM, Qualcomm and Nvidia, but those orders weren’t enough for the company to catch up to TSMC.
Market research firm TrendForce predicts that in the third quarter of 2020, TSMC and Samsung Electronics will account for 53.9% and 17.4% of the global foundry market. This means that the gap will widen further from 51.5% and 18.8% in the second quarter. The widening gap in sales between the two companies is why some experts believe U.S. sanctions on Huawei will not seriously affect TSMC. Therefore, the prospect of Samsung Electronics surpassing TSMC does not seem optimistic.
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