TSMC lowers revenue guidance on crypto mining decline
Taiwan Semiconductor Manufacturing Company, (TSMC) the world’s largest contract chip maker, has cut its full-year revenue guidance on estimates of weakening demand from cryptocurrency mining operations.
The company told business analysts on Thursday that it expected cryptocurrency mining activity to decrease over the coming months as high operational costs for miners made production unprofitable at current price levels.
Revenue would now likely grow in the high single-digit rate, TSMC said, compared with its previous estimate of growth between 10% and 15%.
The new guidance was a dramatic retreat as just three months ago the company reported record sales driven by strong demand from high-performance computing – particularly crypto mining.
TSMC’s 20-nanometer processor is used in Bitmain’s fourth-generation BM1385 mining chip, and the company is to continue increasing production of its next generation of chips as it remains bullish on other fast-growing technology such as artificial intelligence.
Chief financial officer Lora Ho told analysts: “We anticipate our business will benefit from new product launches while cryptocurrency mining demand will decrease.”
Morgan Stanley note
Back in April, Morgan Stanley analysts predicted a decline in mining activity. The investment bank estimated that the break-even point for mining pools for bitcoin was around $8,600, even assuming low power costs.
“Therefore, we think the bitcoin mining hardware demand and price will decline further and affect TSMC’s wafer demand,” Morgan Stanley’s report said. Bitcoin currently trades at $7,390.
AMD and Nvidia
TSMC’s news echoed reports earlier in this month that prices for graphics processing units used in crypto mining rigs have been falling in recent weeks.
Both AMD and Nvidia, the world’s two biggest producers of these units had related share price falls in late June, but have since recovered their poise as cryptocurrency mining customers represent a relatively small ratio of their annual sales.
TSMC’s guidance cut had little impact on the share price on Friday, however. Shares in the company rose 0.7% to T$224.50 on the Taipei Stock Exchange.