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TSMC's Earnings Paints Bright Future For Chip Makers

Daniel Laboe
·2-min read

Demand for chips has surged. Best-in-class and largest chip contractor, TSMC TSM, has illustrated this significant uptick in semiconductor demand with an exciting earnings report that revealed the sector's bright future. The company is working on an atomic scale that no other manufacturer can match, with 20% of its Q4 revenue being driven by 5nm chips. Intel is falling behind the innovative curve that TSMC is setting. Intel is currently working on manufacturing 7nm transistors, putting them at least 3 years behind TSMC’s capability.

TSMC announced in its earnings yesterday that it would be spending $25 to $28 billion to further develop its advanced chip manufacturing to keep up with swelling demand. The company released record quarterly results on Thursday with 22% YoY sales growth and 33% YoY EPS appreciation illustrating substantial margin expansion. Its biggest topline drivers of 2020 were smartphones, high-powered computing, and IoT devices. The biggest and baddest chip innovators like Nvidia NVDA, Broadcom AVGO, Qualcomm QCOM, Intel INTC, and even Apple AAPL all utilize TSMC's cutting-edge manufacturing.

2020 has digitalized the world by years in a matter of months with the need for mobile devices proliferating and the 4th Industrial Revolution taking off. People and businesses are leveraging more digital technology than ever before, which means the need for chips has never been greater. I expect that 2021 will be a strong year of growth for the semiconductor space.

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