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TSMC Q4 profit beats forecasts, powered by 5G chip demand

[TAIPEI] Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, posted a better-than-expected quarterly profit on strong demand for 5G chips.

TSMC, a proxy for global tech demand as its clients include Apple Inc, Qualcomm and Huawei Technologies , said October-December net profit rose 16.1 per cent year-on-year to NT$116.035 billion (S$5.22 billion).

That compared with an average forecast of NT$111.41 billion drawn from 19 analysts, Refinitiv data showed.

Revenue rose 10.6 per cent to US$10.39 billion, versus the company's estimate of US$10.2 billion to US$10.3 billion and an average US$10.55 billion estimate from 21 analysts, according to Refinitiv data.

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Rising demand for 5G smartphones and an upbeat outlook for new technologies including artificial intelligence will further drive sales of TSMC's high-performance chips, known as 7 nanometre, analysts said.

After shrinking for three consecutive years, the smartphone market is back on track to grow this year thanks to 5G smartphone demand. Industry tracker IDC sees global smartphone shipments topping 1.4 billion units in 2020, up 1.5 per cent on year.

Investor sentiment should also get a boost from an initial trade deal agreed this week between the United States and China that is expected to defuse their 18-month trade war, which has weighed on the global economy and the tech industry.

Reflecting growing optimism for the tech sector, TSMC shares hit a record earlier this month after gaining more than 50 per cent in 2019.

Prior to the earnings announcement on Thursday, shares in TSMC closed down 1.62 per cent, versus a 0.21 per cent fall in the wider market, valuing the company at nearly US$295 billion, bigger than US rival Intel Corp's US$256 billion.