Chipmaker TSMC Sees Crypto Mining Demand Offset Smartphone Weakness in Q2

TSMC said on Thursday that chip sales to cryptocurrency miners had offset weaker smartphone demand in the second quarter.

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker and a key Apple supplier, said on Thursday that chip sales to cryptocurrency miners had offset weaker demand for smartphones in the second quarter.

The company reported mixed results for the three months to the end of June. Its revenue stood at $7.85 billion, a 7.2 % drop from the prior quarter, but 11.2% up year-on-year. The figures followed a downward revision in April when TSMC projected second-quarter revenue of between $7.8 billion and $7.9 billion, against analysts’ earlier expectations of $8.8 billion. The correction was made due to anticipated smartphone weakness, although the chipmaker also noted continued strong demand from the crypto space.

“Our second-quarter business was mainly impacted by the mobile product seasonality, while the continuing strong demand from cryptocurrency mining and a more favorable currency exchange rate moderated the mobile softness,” TSMC’s chief financial officer, Lora Ho, said in a statement on Thursday.

She added, however, that demand for chips from crypto miners is likely to soften in the third quarter because of weaker prices for cryptocurrencies: “Moving into third-quarter 2018, we anticipate our business will benefit from new product launches using TSMC 7-nanometer technology while cryptocurrency mining demand will decrease from second quarter.”

This expectation prompted another revision of TSMC’s quarterly performance forecast. The chipmaker is now predicting revenue of $8.45 billion to $8.55 billion in the third quarter, short of the $8.68 billion previously projected.

TSMC had tapped surging interest in cryptocurrencies by making chips for mining hardware producers such as China’s Bitmain. According to a recent Morgan Stanley report, about 10% of TSMC’s revenue now depends on cryptocurrency mining demand. Thus, the recent bearish crypto market may affect the company’s performance in the coming months.

Bitcoin (BTC) has been volatile this year, and has lost more than half of its value since it reached a record high of nearly $20,000 in December. However, some crypto pundits believe it may have bottomed out. At press time, the headliner is changing hands at around $7,375, up 0.5% for the past 24 hours, according to Cryptovest trading data.

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