Bitcoin has become the topic of the day for positive and negative reasons. In the latest news, crypto-currency mining stands to prove beneficial for the revenue of the biggest chipmaker company, Taiwan Semiconductor Manufacturing Co.
TSMC has been manufacturing chipsets for Apple Inc.’s iPhones for over a decade now. But due to the dwindling shipment of Apple’s latest device, the iPhone X, the revenue being earned by the company due to its partnership with Apple stands to be dwarfed by the revenue it may earn from crypto-currency mining. Other reasons contributing to this development are Bitcoin’s 1,400% leap in 2017 that has boomed crypto-currency mining, and the growing number of smartphone companies like Oppo, Xiaomi, and Vivo in the market, which is increasing the availability of a variety of affordable smartphones.
While Apple faces competition in the world of smartphones, thus affecting TSMC’s revenue, Bitcoin’s leap has reinforced the interest of designers from Nvidia Corp. to Advanced Micro Devices Inc. to invest in TSMC.
Apple contributes to about 5% of the overall revenue earned by TSMC, but crypto-currency mining may contribute to almost 10% of the company’s revenue this year, having already earned $350 million to $400 million of revenue in the third quarter itself. However, cryptocurrency mining comes with its own set of disadvantages, and the increased profit may be short-term only. The government of South Korea and China continues to increase regulations to curb the growth of crypto-currency in order to avoid financial risks. Furthermore, the mining amount has been limited to 21 million, having mined which, chip demand will disappear altogether.
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Benjamin Chiang, an analyst at KGI Securities, expressed his apprehension last week by saying,
Although some investors are bullish that Bitcoin-related chipset demand could offset soft smart-phone demand in 2018, we question whether Bitcoin demand will be sustainable.
However, to put things in a positive light, Sebastian How, an analyst with CL Securities Taiwan Co., has said,
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.