TSMC Rises to Record High as Investors Bet on Crypto-Mining

(Bloomberg) -- Taiwan Semiconductor Manufacturing Co.’s shares rose to a record after Apple Inc.’s main chip supplier reported quarterly results ahead of expectations, buoyed by global demand for the powerful semiconductors used in cryptocurrency mining.

The stock finished 2.8 percent higher at NT$255.50. Investors focused on TSMC’s ability to ride a boom in cryptocurrency mining driven by Bitcoin’s 1,400 percent leap last year -- the same explosive growth that’s bolstered shares of designers from Nvidia Corp. to Advanced Micro Devices Inc. 

Founder Morris Chang -- who’s handing the company’s reins to two lieutenants this year -- told investors Thursday that high-performance computing, Internet of Things and autos will help drive revenue growth of 10 to 15 percent in 2018. 

That forecast “is a hint that, given its technological lead, TSMC can continue to gain market share this year,” Jinyuan Lv and Simon Lu, analysts for JihSun Securities, wrote Friday. “Its main growth in 2018 will come from high-performance computing” and other areas.

Mining -- the process of winning digital coins by crunching complex equations at the heart of virtual currencies like Bitcoin -- requires the raw processing power of the types of chips that TSMC cranks out for Nvidia or AMD. Crypto-mining could account for as much as a 10th of the Taiwanese company’s revenue in 2018, some analysts say, becoming its fastest-growing segment. 

That’s a timely boost, as expectations for iPhone X shipments shrink and Chinese smartphone demand tapers off. On Thursday, TSMC forecast revenue that fell short of projections.

Smartphone shipments slid almost 12 percent in China in 2017 as portions of the world’s largest mobile market approached saturation point, according to the China Academy of Information and Communications Technology. TSMC however may win more orders from fast-growing brands such as Huawei, which designs its own mobile processors and may turn to TSMC for mass production.

The company is preparing this year to move into cutting-edge 7-nanometer chip production from June -- a big question mark given it’s untested technology. But a bigger unknown may be TSMC’s budding crypto-miners business, at a time regulators from China to South Korea have clamped down on virtual currency trading to curb financial risks.

To contact Bloomberg News staff for this story: Gao Yuan in Beijing at ygao199@bloomberg.net.

©2018 Bloomberg L.P.

With assistance from Gao Yuan