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Apple Supplier TSMC Beats Q4 Profit Forecast Amid 5G-Lead Smartphone Rebound

TSMC, the world's biggest contract chipmaker and a key Apple supplier, is boosting its 2020 capex plans amid a rebound in smartphone sales triggered by the rollout of 5G networks.

Taiwan Semiconductor Mfg. Co. Ltd.,  (TSM) - Get Taiwan Semiconductor Manufacturing Company Ltd. Report the world's biggest contract chipmaker and a lead supplier for Apple Inc.  (AAPL) - Get Apple Inc. Report iPhones, posted better-than-expected fourth quarter profits, and forecast a surge in near-term sales, amid a 5G-lead resurgence in global smartphone demand. 

TSMC said profits for the three months ending in December came in at T$116.035 billion ($3.88 billion), up 16.1% from the same period last year and firmly ahead of the Refinitiv-collected forecast of $T111.41 billion. Group revenues, which TSMC reports in U.S. dollars, rose 10.6% to $10.39 billion, a figure it expects to hit between $10.2 billion and $10.3 billion over the first three months of the year - a 45% surge from the same period in 2019.

“Our fourth quarter business benefited from strong demand for high-end smartphones, initial 5G deployment and high performance computing related applications using TSMC’s industry-leading 7-nanometer technology,” said CFO Wendell Huang. “Moving into first quarter 2020, despite mobile product seasonality, we anticipate our business to be supported by the continued ramp of 5G smartphones.”

Fourth quarter smartphone-related sales, TSMC said, rose 16% from last year, with north American sales comprising 59% of total revenues, TSMC said its 2020 capital expenditure plans are now forecast in the $15 billion to $16 billion range, an increase from the $14 billion to $15 billion it estimated late last year.

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TSMC's U.S.-listed shares were marked 1.5% higher in pre-market trading Thursday to indicate an opening bell price of $59.28 each, a move that would extend the stock's six-month gain to around 42%. Apple shares, meanwhile, were seen 0.8% higher at $313.81 each.

Apple will publish its fiscal first quarter earnings on January 28, with analysts expecting earnings per share of $4.53 and overall revenues of $88.22 billion.

Apple said on October 30 that it sees December quarter sales in the region of $85.5 billion to $89.5 billion after it said fourth quarter services revenues grew 18% to a record $12.5 billion, offsetting the 10% gain in iPhone revenues, which hit $36.76 billion.