Chipmakers Blame Revenue Losses on Big Drop of Cryptocurrency, Which Actually Account for a Small Part

United Microelectronics Corporation (UMC), one of the leading Taiwanese chip manufacturers, saw a revenue decline of about 10% in the fourth quarter of 2018, for which, the giant blamed the downturn in demand for cryptocurrency.

According to the company’s report, it racks in a revenue of NT$35.52 billion in the Q4 2018, down 9.8% QoQ from NT$39.39 billion in Q3 and declined 3.0% YoY from NT$36.63 billion.

Its co-president Jason Wang predicted a further slowdown in demand for the first quarter of 2019, saying that

“Looking into the first quarter of 2019, we anticipate further deceleration in customers’ wafer demand, due to a softer than expected outlook in entry-level and mid-end smartphones as well as falling cryptocurrency valuations…”

The crypto market has been in red chaos throughout 2018, which has played its impact on chipmakers who have reserved some of their capacity for the mining sector due to the spiking mining demand in 2017. UMC is not the only chip maker to bear losses from the falling cryptocurrency valuations.

Taiwan Semiconductor Manufacturing Company (TSMC), a major supplier of mining giant Bitmain, also attributes some of their losses to the sustained crypto chill. The company’s CEO C.C.Wei said in the Q4 earnings call that cryptocurrency has previously accounted for a lot of the company’s orders, but that it had gone down since the boom year of 2017,

“If we’re excluding the cryptocurrency mining, HPC also grows slightly. But cryptocurrency is a big drop from 2018 to 2019. So if we put the cryptocurrency together in the HPC, it’s a big drop. It’s almost a double-digit.”

When it comes to the company’s crypto business accounting in 2019, Wei said,

“This year, we don’t forecast — we become conservative in forecasting this volatile business. So the cryptocurrency mining this year is much, much less than last year. And to what percentage, I don’t think it’s — I can release it right now.”

Nevertheless, from the figures released by the two chip giants, the demand for crypto mining actually accounts a very small part of their business. Apart from the decreasing crypto business, their mobile business/ smartphone also see a sustained decline. It’s becoming tiresome to hear more voices blame the crypto bear run for their stalling business. After all, HPC chips are in virtually all devices today.

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