Apple’s A-Series chipmaking partner Taiwan Semiconductor Manufacturing Co (TSMC) has reported strong sales for Q3 2019, with revenue increasing 10% year-over-year. The chipmaker says the increase is due to high demand from smartphone makers.
The company also expects strong demand in Q4, and expects to see a dramatic boost in demand in 2020, thanks to 5G smartphone demand. Apple is expected to launch its first 5G smartphone in 2020.
Reuters reports TSMC beat analysts expectations, reporting a 13.5% rise in third quarter net profit to T$101.07 billion ($3.30 billion), its strongest growth since the first quarter of 2017, thanks to strong sales to smartphone makers. Analysts on average had expected a T$96.33 billion profit.
Revenue rose 10.7% to $9.4 billion, beating the company’s own expectations of $9.1 billion to $9.2 billion. Sales from smartphone makers accounted for 49% of its total revenue, up from 45% from a year ago.
The company says it expects this trend to continue during Q4, and is increasing its capital expenditures by up to $5 billion on production capacity to meet the expected demand increase.
“5G smartphone growth momentum is stronger than we expected… We have good reasons to increase our capex this year and next year,” TSMC CEO C.C. Wei told an earnings briefing after reporting the Taiwanese company’s strongest quarterly profit growth in more than two years.
Wei said his company has almost doubled its fifth-generation (5G) smartphone penetration forecast for 2020, to mid-teens percent, up from a previous forecast of single digits.
TSMC doesn’t dedicate all of its production capacity to Apple, it also makes chips for a number of other smartphone makers, and part of the company’s strong sales numbers are due to orders from Huawei, However, the numbers also back up reports of strong iPhone 11 sales.