Qualcomm’s Loss Is TSMC’s Gain

“We continue to be supply constrained on our 28nm products but are ramping supply with multiple foundries in the September quarter and again into the December quarter.,” says Mollenkopf, “we currently project that we’ll be able to closely match supply with demand as we exit the calendar year.”

Mollenkopf adds that this effort in getting supplies ramped at four foundries – TSMC, UMC, Globalfoundries and Samsung – was reducing Qualcomm’s profit margins.

Asked to what extent supply constraints were hitting Qualcomm’s bottom line, CFO Bill Keitel would not be drawn any further than saying: “Going out of this quarter, if we could ship all the demand that’s in front of us for this quarter, I would just say that our revenue and operating margin would be materially higher.”

Qualcomm’s operating margin in Q3 is expected to be a lowly 20% to 22% because of the investments required to ramp new fab lines.

By contrast, TSMC’s Q3 operating margin is expected to be between 34% to 36%, showing that, while 28nm might not have been great for TSMC’s reputation, it has been good for its bottom line.

TSMC’s Q3 was its best quarter for a year and half with revenues up 15.9% at $4.3 billion and profit up 24.9% at $1.4 billion.

28nm accounted for 7% of wafer revenues in Q2, and TSMC intends to double the 28nm wafer shipments in Q3 from Q2 levels. TSMC expects 28nm to account for more than 80% of Q3 revenue growth.

For Q3, TSMC expects revenue to grow again – to between $4.5 billion and $4.6 billion.