Huawei's new P30 may help TSMC recover from the bottom

Some time ago, the number of scrapped wafers due to photoresist defects at TSMC's Fab 14B in Nanke expanded to nearly 100,000 pieces, which reduced revenue by US$550 million in the first quarter of 2019. In addition, inventory adjustments in the semiconductor industry, conservative customer orders, and Apple's smartphone sales that were not as good as expected have all had a certain impact on TSMC's operations.

On the evening of March 26, Huawei released the Huawei P30 series flagship phone in Paris. According to Taiwanese media reports, the market response to the P30 was good. TSMC's supply chain revealed that Huawei's chip factory HiSilicon Semiconductor placed orders in advance and moved the third quarter orders to the second quarter for production. In addition, TSMC will rush to complete orders that were affected by photoresist contamination last quarter, which will heat up operations this quarter. In addition, the easing of the Sino-US trade war and the stimulating market demand due to new technologies, TSMC's operations are expected to rise from the bottom quarter by quarter starting this quarter.

TSMC's supply chain also revealed that TSMC's operations this quarter are expected to see its main customer HiSilicon introduce the next-generation 7-nanometer process for mass production of mobile phone chips ahead of schedule, which will inject new vitality into TSMC's operations this quarter; chips from customers such as Nvidia and UMC that were originally interfered with by photoresists were also delivered this quarter after increased production capacity and remanufacturing last quarter, so that TSMC's operations this quarter are expected to pick up significantly.

In addition, the latest global smartphone sales data released by research organization IDC in 2018 shows that the world's top three smartphone manufacturers are Samsung, Apple and Huawei. It is worth noting that the market share of Samsung and Apple is declining, while Huawei's annual mobile phone shipments are 206 million units, with a market share of 14.7%, a year-on-year increase of 33.6%. Huawei's huge mobile phone orders will also benefit TSMC.

Huawei has also received good news in 5G equipment bidding. With its outstanding technological advantages and cost-effectiveness, Huawei has won 30 commercial contracts. Huawei has decided to increase its inventory and HiSilicon has increased its orders. In addition to TSMC, other Taiwanese manufacturers in the supply chain, such as ASE Technology Holding, King Yuan Electronics, and Siliconware Precision Industry, have also been asked to increase their inventory.