Apple (AAPL) iPhone chip supplier Taiwan Semiconductor Manufacturing (TSM) saw healthy sales growth in November thanks to strong demand for smartphone processors. Taiwan Semiconductor stock spiked to a record high on the news Thursday.
XTaiwan Semi reported revenue of $3.54 billion in November. Sales rose 1.7% from the previous month and popped 9.7% year over year in local currency.
"We think this is largely due to smartphones (seasonal ramp) along with a recovery in data center chips," RBC Capital Markets analyst Mitch Steves said in a report to clients Wednesday.
He added, "Notably, we think first quarter 2020 will likely see high demand for 7-nanometer chips due to ramps at AMD (AMD), while smartphones could continue to be strong (Chinese New Year), where Huawei and MediaTek would likely drive demand."
Taiwan Semiconductor Stock Gaps Up
On the stock market today, Taiwan Semiconductor stock jumped 4.9% to close at an all-time high of 58.61.
On Sept. 17, Taiwan Semiconductor stock broke out of a cup-with-handle base at a buy point of 44.98, according to IBD MarketSmith charts. For the past week, it has been trading in the 20%-25% profit-taking zone. It gapped out of that zone on Thursday.
Qualcomm Seen As Key Beneficiary Of 5G Wireless
Rosenblatt Securities analyst Jun Zhang sees Taiwan Semiconductor as one of the key beneficiaries from the ramp of 5G wireless. Wireless chipmaker Qualcomm (QCOM) is another semiconductor firm poised to benefit from adoption of 5G smartphones, he said in a note to clients Thursday.
"For 2020, we expect Huawei, Vivo, Oppo and Xiaomi to ship a combined 200 million 5G smartphones globally, Samsung to ship 40-60 million 5G smartphones globally, and Apple to ship 30 million 5G smartphones globally," Zhang said.
Huawei, Vivo, Oppo and Xiaomi are top Chinese smartphone makers. Samsung, the world's leading smartphone vendor, is based in South Korea.
Bank of America and Cowen earlier cited chipmakers Skyworks Solutions (SWKS), Qorvo (QRVO) and Qualcomm as 5G beneficiaries.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor companies.
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