Taiwan Semiconductor Mfg. Co. Ltd., (TSM) - Get Report the lead chip supplier for Apple Inc. (AAPL) - Get Report iPhones, forecast record 2018 sales Thursday as the ongoing boom in cryptocurrency trading and mining offsets what could be disappointing revenues from its most important customer.
TSMC, as it is commonly known, said net profit for the three months ending in December, its fiscal fourth quarter, slipped 0.9% to T$99.3 billion ($3.3 billion) even as revenues grew 5.9% to $9.2 billion. Both figures topped Street expectations and capped a year in which group revenues advanced by 3.1%. However, the ongoing surge in digital currency transaction mining, and the surge in chip demand it is likely to ignite, should mean that TSMC revenues between 10% and 15% this year, the company said, even as it anticipates little change in demand from its smart phone-building customers.
"The urge to mine cryptocurrency is very strong, and the incentive of course depends on the price of cryptocurrency," TSMC Chairman Morris Chang told investors on a conference call. "Demand right now or for the last year has been very strong, and we expect it to continue to be strong. I believe that we will both satisfy our customers and we will not be too optimistic."
TSMC's U.S.-listed ADRs rose 1.58% in pre-market trading, indicating an opening bell price of $43.13 each, a move that would take their three-month gain to 6.25%. The group's Taiwan-listed shares closed 2.69% higher at T$248.5 each prior to the quarterly earnings release.
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However, the group's first quarter revenue projection of between $8.4 billion and $8.5 billion fell modestly short of analysts' forecasts and could suggest softer-than-expected sales for Apple's flagship iPhone X over the holiday period, which covers the Cuptertino, Calif-based company's fiscal first quarter.
Apple shares were pressured in early Wednesday trading after Longbow analyst Shawn Harrison said the anniversary edition of the iPhone, which has a list price of $999, has seen "lukewarm" reception from customers and called the current cycle of overall iPhone sales "good, not great."
Harrison also clipped his earnings per share estimate for the world's biggest tech company by 29 cents to $11.25 and pegged his fiscal year shipment forecast at 233 million units. Longbow's rating on the stock was reduced to "neutral" from "buy."
TSMC's roust outlook for the chip sector as a whole, however, follows stronger-than-expected earnings Wednesday from ASML NV (ASML) - Get Report , a Dutch supplier of tools and equipment for the semiconductor industry. Shares in the group hit a record high and revived prospects to a renewed 'supercycle' in global chip demand.
"If you want to hang your hat on something that's good, take a look at the number from ASML Holding (ASML) - Get Report ," TheStreet's Jim Cramer said on CNBC's "Stop Trading" segment Wednesday morning.