Increased crypto mining activities mean increased demand for microchips from manufacturers such as Nvidia and AMD. TSMC makes semiconductor chips for these two whose raw processing power is demanded to mint new coins through Proof of Work consensus.
Although Apple absorbs most of its sales — a fifth. The contribution from cryptocurrency miners could double this year from 5 to 10 percent.
“The mining impact on TSMC is now akin to that of a popular new iPhone,” said Mark Li, a Hong Kong-based analyst with Sanford C. Bernstein & Co. “The difference is that each new iPhone requires a huge amount of innovation and marketing. The Bitcoin contribution is automatic.”
Last year, the company gained between $350 million to $400 million of revenue from crypto-mining. And also during the third quarter alone according to co-Chief Executive Officer Mark Liu. Increase in income from cryptocurrency mining streams could help it absorb adverse effects of market forces against it. Such as the entry of new models from players such as Oppo, Vivo, and Xiaomi Corp.
Sebastian Hou, an analyst with CL Securities Taiwan Co, said,
“Cryptocurrency is like a call option for TSMC, which is an attractive investment on its own. If mining demand vanishes tomorrow, it shouldn’t affect the investment outlook. But if it turns out to be strong, the company will rake it in”.
Apple and smartphone boom especially in China last year helped TSMC’s share improve in pricing by 69 percent since the start of 2016. However, Chinese mobile shipments decreased by nearly 12 percent last year.
Bitcoin mining operations are widespread and are expecting to grow further this year. Although Bitcoin is itself to prove worth in front of hard biting regulators who threaten its ecosystem from all over. For instance, Bitcoin mining companies in China, which was a dominant crypto market as of last year. However, before the government went on to crack down ICOs and other crypto operations in general.
Benjamin Chiang, an analyst at KGI Securities, wrote last week,
“Although some investors are bullish that Bitcoin-related chipset demand could offset soft smartphone demand in 2018. We question whether Bitcoin demand will be sustainable” if prices slide”.