The company said that demand is so strong that it is preparing to raise its full-year capital expenditure to more than $11 billion, the high end of its target, and that it may need to increase 2019 capex to accelerate the installation of tools for 5nm production next year.
According to TSMC, its 7nm node is poised to become its new cash cow, as it accounted for 21% of revenue in the second quarter, compared with 10nm at 3% and 16nm at 23%. Combined, these three nodes accounted for up to 47% of total sales, increasing from 42% in the first quarter.
TSMC, whose biggest customers include the likes of Apple and Huawei, may be signaling an improved outlook for the global electronics industry.
The company's CEO C. C. Wei has suggested that the electronics industry may well have passed the bottom of the current business cycle and that demand may now start to increase, although Wei added that global economic conditions remain soft and trade uncertainties persist.
TSMC’s third-quarter business is expected to be driven by new product launches of premium smartphones and the increased adoption of 7nm for high-performance computing applications, while with worldwide 5G development accelerating the company also expects to see increased demand for 5nm and 7nm..
Beyond 7nm, TSMC is offering what it calls N7+ and N6. Demand for N7 is seen as being strong in mobile, high-performance computing and IoT applications. N7+, which uses extreme ultraviolet (EUV) lithography for a few critical layers, has now entered volume production, and customers' end products using N7+ are expected to be on the market in high volume during the third quarter.
N6, which will use more EUV layers than N7+, will see the first tape-outs in second half of 2020 and volume production before the end of the year.
