Microchip Maker TSMC Sees Cryptocurrency Mining Lead Sales

Conor Maloney
  • TSMC expect continued "strong demand" for crypto mining 
  • Their most recently quartlery report show how crypto mining is carrying the company through a seasonal decline in phone sales

The world's leading microchip manufacturer, the Taiwan Semiconductor Manufacturing Company (TSMC), recently released its quarterly report, which reveals cryptocurrency mining has been carrying the company through a seasonal decline in mobile phone sales.

The recent surge in cryptocurrency mining has taken the world by storm, but it's still surprising to think that the relatively new trend could impact such an established market in a major way.

TSMC makes over half of the world's microchips, and while refusing to release the exact figures as to what percentage of their business is now dependent on cryptocurrency mining, the company’s executives had only good things to say about crypto mining in their bullish quarterly report.

Per the report, the company generated $8.5 billion in revenue on Q1 this year, showing a 6.1 percent increase over last year. TSMC provides mining hardware manufacturer Bitmain its ASIC chips, and it appears the success of the Antminer E3 may have something to do with the continued growth, as 41 percent of the Q1 earnings occurred in March.

C.C Wei, President and chief compliance officer (CCO) at TSMC, claimed that "these results were mainly driven by strong demand from high performance computing such as cryptocurrency mining".

“Our first quarter business was impacted by an unfavorable foreign exchange rate as NT dollar has appreciated by 5.9% against US dollar over first quarter of 2017, as well as mobile product seasonality, while the continuing strong demand for cryptocurrency mining moderated the mobile softness,” said Lora Ho, the company’s SVP and Chief Financial Officer (CFO).

She added:

“Moving into second quarter 2018, continued weak demand from our mobile sector will negatively impact our business despite strength in cryptocurrency mining. Based on our current business outlook, management expects the overall performance for second quarter 2018 to be as follows”:

Lora Ho

Mark Liu, also CCO, said "We see very strong demand in the first quarter from cryptocurrencies. During the second quarter, while we do see some weakness in the 28mm chip, the [demand for] the rest of the technology is still very strong on cryptocurrency." Liu went on to say that blockchain technology and cryptocurrency mining would bring "innovation and demand for years to come.”

The fourth quarter of 2017 was also largely driven by cryptocurrency mining - as the largest semiconductor foundry in the world and producer of over half of the world's microchips, crypto mining sustaining the manufacturing giant is a strong sign cryptocurrency adoption and mining are rising worldwide.

Bitcoin Trading at $600 Premium in India as Potential Ban Looms

Bitcoin (BTC) is currently trading at a roughly $600 premium in India, according to the market price available on the rupee-based exchange BitBns.com.

At the time of writing, bitcoin trades for just under 8 lakh rupees, or 800,000 INR, which is nearly $11,500 - significantly more than the going dollar price of $10,860.

This extreme price premium can be attributed to the difficulty of buying crypto in the country. As of last year, all regulated Indian banks and financial institutions have been banned from transacting in, and offering services related to crypto.

But the environment could soon become even more hostile.

CryptoGlobe reported in late April that a government working group made up of Indian tax, consumer protection, and general economic ministries had recommended a complete ban on even transacting or owning cryptoassets, much less integrating them into the mainstream, legal economy.

Bitcoin Demand Strong in India?

BitBns, one of the few operational rupee-denominated exchanges remaining, has apparently been able to skirt the increasingly draconian environment by allowing users to conduct their own P2P market, facilitated by the website, in order to buy and sell in Indian rupees. Other popular Indian exchanges, like Coindelta, have been forced to shut down.

The high premium may suggest a healthy demand in India for bitcoin and other cryptoassets, as Indians without international banking connections are forced to use the local currency to buy crypto. Data from crypto analytics website Coin.dance show that another popular crypto-fiat P2P platform, LocalBitcoins, has seen a sharp uptick in Indian trading volume since March-April.

indialocalbitcoins.png(source: Coin.dance)

CryptoGlobe reported last month that volumes were not affected by, and even increased in spite of, the threat of a crypto ban.

Indian Government Measures

One recent instance in particular shows just how far the Indian government seems to be going to control the Indian economy.

In late 2016, the national government suddenly and without warning even to its own ministries, declared that all 500- and 1,000-rupee banknotes currently in circulation were null and void - in an action that is known in India as “Demonetization.” These notes represented more than half of the physical money then in circulation in the country.

While the stated aims of the action were to root out corruption and “black money” from the economy, Demonetization has often been panned as a disastrous failure that cost 1% of the country’s GDP, a loss of 1.5 million jobs, and hurt the poor most of all.