5G Smartphone Market Share to Double in 2021, Says IPhone Supplier TSMC
Taiwan Semiconductor Manufacturing Co. expects 2021 global smartphone shipments to increase 10% year on year and 5G handsets to take 35% market share this year, up from 18% in 2020, said CEO C.C. Wei on a Q4 earnings call Thursday. TSMC is a major components supplier to the iPhone 12.
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The “silicon content” of 5G smartphones will continue to increase compared with their 4G counterparts, said Wei. “We continue to expect faster penetration of 5G smartphones” compared with 4G penetration rates historically, as 5G handsets “benefit from the significant performance” upgrade to drive more artificial intelligence applications and “more cloud services,” he said.
TSMC views 5G as a “multiyear megatrend that will enable a world where digital computation is increasingly ubiquitous,” said Wei. That’s expected, he said, to “fuel the growth” long term of all four of TSMC’s business “platforms” -- smartphones, high-performance computing (HPC), automotive and IoT. “As we enter the 5G era, a smarter and more intelligent world will require massive increases in computation power and greater need for energy-efficient computing, and therefore, require leading-edge technologies.” TSMC is looking to HPC as an “increasingly important driver” of the company’s “incremental revenue growth,” he said.
Wei forecasts that global semiconductor industry revenue, excluding memory, will grow by about 8% this year, with foundry industry growth expected to rise 10%, he said. “We are confident we can outperform the foundry revenue growth and grow by a midteens percentage in 2021 in U.S. dollar terms.” TSMC expects a 10%-15% compound annual growth rate in dollar revenue through 2025, he said.The stock closed 6% higher Thursday at $126.45.
TSMC is “on track with good progress” in its 3-nanometer (N3) foundry development, said Wei. “N3 will be another full node stride” from its 5-nanometer (N5) technology, with up to 70% logic density gain, up to 15% performance gain and up to 30% power reduction, he said. TSMC is experiencing “a much higher level of customer engagement” for N3 implementation in HPC and smartphones compared with N5 “at a similar stage,” he said.
N3 sample production is scheduled to begin this year, and volume production is targeted for the second half of 2022, said Wei. TSMC’s N3 will be the industry's “most advanced foundry technology” when it is introduced, he said. “We are confident our 3-nanometer will be another large and long-lasting node for TSMC.”
TSMC's $17.2 billion budget for 2020 capital expenditures will expand to at least $25 billion this year “to support our customers’ capacity needs,” said Chief Financial Officer Wendell Huang. About 80% of the capex budget “will be allocated for advanced process technologies,” including N3 development, he said. Wei resisted questions about how much of the capex boost will be allocated for Apple. “We don't comment on specific customers,” he said.
Huang also wouldn’t say how much of the 2021 capex budget increase will be directed to building TSMC’s U.S. fab. Construction on the site in North Phoenix begins this year, he said. TSMC recently bought “a big piece of land in Phoenix, 1,100 acres,” with the long-term plan to build a series of “mega-scale production sites” there, said Chairman Mark Liu. “Currently our plan is to only work on the Phase I production,” he said. “I'm talking 2024 with 20,000 wafers per month.” TSMC will assess “the market conditions and the cost economics” before deciding “the next steps,” he said.