It has been reported that TSMC have seen a little rise in their profits, putting them ahead of the expectations of Wall Street for this quarter, so why in a down-turning market are TSMC still making money, while Intel loose profits?
The company has seen a quarter one new profit increase of around 18% from last year, taking them up to the tidy sum of $1.32 billion. This is mostly due to the fact there is a strong demand for smartphone and tablet devices. As makers of high-performance chips for these devices, TSMC have seen high demand for their products. This puts TSMC's gross margin at 45.8%, just ahead of the 43.5% guide that was set previously.
It’s an interesting contrast though, given that we are still seeing slow sales on some PC hardware and while companies like Intel are still turning a profit, it’s a reduced profit. Other companies like AMD are having a hard time of it too, and it seems the industry shift towards mobile hardware hasn't slowed yet. Where the divider will settle will only be discovered with time.
As a result of their success, TSMC is to spend a record amount this year, growing their mobile sector as consumer demand increases, with up to $9 billion to increase production capacity; a big increase on last year’s $8.3 billion spending spree.