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Crypto-Mining Could Represent 10% of TSMC’s Revenue In 2018

Taiwan Semiconductor Manufacturing Co Ltd(TSMC), the world’s largest contract manufacturer of semiconductors, undoubtedly, is the main beneficiary of bitcoin’s 1400% surge in 2017 as bitcoin mining giants rush to purchase its HPC chips.

This Taiwan’s largest company reported its latest quarterly earnings on Thursday, booking NT$99.29 billion (S$4.4 billion) in its net profit in Q4, just 0.9 percent below the same quarter a year earlier and slightly ahead of an average forecast of NT$97.78 billion drawn from 20 analysts polled by Thomson Reuters.

An employee walks in front of the logo of Taiwan Semiconductor Manufacturing Co Ltd (TSMC) at its headquarters in Hsinchu, northern Taiwan, November 19, 2015. REUTERS/Pichi Chuang

Analysts contribute the revenue growth of this chipmaker to the skyrocketing demand for the chips it manufactures used in bitcoin and other cryptocurrency mining. The bitcoin mining boon has stimulated a 38% boost in the company’s market value over the past year to $ 212billion. According to the Q3 quarterly earnings, TSMC generated around 350million dollars from cryptocurrency mining businesses,accounting for 5.1% of the Group’s sales.

This is a timely boon for this Apple supplier. TSMC has been the main chip supplier to Apple Inc.’s devices for the past decade. While Apple sees a shrinking shipments of its new iPhoneX recently , thus affecting TSMC, Bitcoin fever makes up for the company’s loss in time. That’s because the HPC chip that TSMC manufactures is a key element for the development of advanced technology applications such as artificial intelligence, AR / VR and bitcoin mining equipment.

“The mining impact on TSMC is now akin to that of a popular new iPhone,” said Mark Li, a Hong Kong-based analyst with Sanford C. Bernstein & Co. “The difference is that each new iPhone requires a huge amount of innovation and marketing. The Bitcoin contribution is automatic.”

According to Bloomberg, cracking out crypto-mining devices could account for a 10th of TSMC’s revenue in 2018, becoming its fastest-growing segment. This could be proven by bitcoin miners’ moves. Bitmain, one of world’s largest bitcoin miners, urgently ordered 100k 12nmchips from TSMC at the beginning of 2018. 10k chips will be delivered every month in Q1 2018 and more in Q2.

TSMC hopes the cryptocurrency frenzy could provide growth impetus for a long period. “We expect high-performance computing(HPC) will become our major growth engine, starting in 2020.” TMSC’s CFO Lora Ho said in the Q3 teleconference.

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