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TSMC Boosts Q1 Revenue Forecast, Apple Supplier Sees Surging Global Chip Demand

Work-from-home shifts, cloud expansions and 5G network rollouts should continue to boost global chip demand, TSMC said Thursday after it reported record fourth quarter profits and boosted its near-term outlook.

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 record fourth quarter profits and boosted its near-term growth forecasts amid a surge in global demand for high-powered semiconductors. 

TSMC said profits for the three months ending in December came in at T$142.8 billion ($5.1 billion), up 23% from the same period last year, a record tally that was firmly ahead of the Refinitiv forecast of $T$135.4 billion. Group revenues, which TSMC reports in U.S. dollars, rose 22% to $12.68 billion, a figure it expects to improve to a record of between $12.7 billion and $13 billion over the first three months of the year. 

The expected increase in global chip demand, driven by work-from-home dynamics that boost computer purchases and cloud storage needs as well as 5G network rollouts that will trigger smartphone upgrades, will likely power revenue growth for at least the next five years, TSMC said, as it lifted its compound annual growth rate targets to between 10% and 15% for the 2020 to 2025 period. 

It also boosted capital spending plans to between $25 billion and $28 billion. 

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“Our fourth quarter business was supported by strong demand for our industry-leading 5-nanometer technology, driven by 5G smartphone launches and HPC-related applications,” said CFO Wendell Huang. “Moving into first quarter 2021, we expect our business to be supported by HPC-related demand, recovery in the automotive segment, and a milder smartphone seasonality than in recent years.”

TSMC's U.S.-listed shares were marked 6.35% higher in early trading Thursday to change hands at $126.5 each, a move that would extend the stock's year-to-date gain to around 87%.