Taiwan Semiconductor Manufacturing Company Limited, who provides chips to Bitcoin mining giant Bitmain, says that 2018 saw a downturn in demand for crypto mining chips. In a recent conference call with investors, TSMC CEO C. C. Wei said that cryptocurrency had previously accounted for “a lot” of the company’s orders, but that it had gone down since the boom year of 2017.
Presumably referring to Bitmain, TSMC Chairman Mark Liu said:
We don’t want to specify too much of the segment, particularly it belongs to one of the big customers.
The firm still posted a profit for the year. They believe that demand for new high-end smartphone chips will offset a decline in demand for ASIC chips. A securities analyst asked the company which sector had seen the “biggest decline,” to which Wei replied:
High-end smartphone is one thing, and then others seeing the drop, actually you can imagine that cryptocurrencies mining, they dropped quite a lot. And then related to that might be some of the high-performance computing that you can see from other applications that related to the cryptocurrency mining.
A representative from Susquehanna Financial Group asked about why the downturn in crypto is still affecting the business all these months later.
I believe cryptocurrency accounted for only a few of percentage of overall revenues in the first half of ’18. So why is there still an overhang on your HPC revenue mix? I believe you said including crypto, it will be — HPC will be down double digits. And I’m just trying to better understand how it has trended from ’18 to ’19?
Wei, seeming slightly flustered, responds:
Okay. This year, we don’t forecast — we become conservative in forecasting this volatile business. So the cryptocurrency mining this year is much, much less than last year. And to what percentage, I don’t think […] I can release it right now. […] we expand in our customer portfolio and product portfolio. But their ramp will start from probably in the second half this year with the small-volume and then going to the mass production next year. That’s why this year, we saw just slightly increase on the HPC business excluding the cryptocurrency.
A separate press release from TSMC reports increased profits a bit more than 10% over last year. Technology investors are accustomed to much better returns, and the consensus was that without the drop in demand for cryptocurrency mining chips, returns would be much stronger.
Year-over-year, fourth quarter revenue increased 4.4% while net income and diluted EPS both increased 0.7%. Compared to third quarter 2018, fourth quarter results represented an 11.3% increase in revenue and a 12.3% increase in net income.
Bitmain, meanwhile, continues to have both legal and financial troubles. This week, the company announced a new round of layoffs. There are strong reasons to believe a boardroom shake-up is in progress, CCN reported last week. To top it off, the Bitmain initial public offering may never happen.
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