Is it profitable to make chips? Of course it makes money! But if you want to make a lot of money in the chip field, it is not easy, because core is a high threshold, long cycle, big investment industry.
Building a wafer factory is often billions of dollars, even tens of billions of dollars, and there are many core manufacturing enterprises at the same time. If they have no core technology and high fungibility, it is difficult to make money.
Therefore, we see that some backward wafer companies are making hard money, with a profit margin of less than 10% or even a loss. Only those companies with advanced technology that cannot be replaced can continue to make money and make a lot of money.
TSMC, for example, has become the world's most profitable and valuable chip company in recent years, thanks to its leading technology and lack of competition.
It is also likely that TSMC will surpass TSMC as the world's largest chip company by revenue in the second quarter of 2022, thus becoming the triple crown.
First, the profit margin. According to the data of the first quarter of 2022, THE revenue of TSMC was about NT $491 billion, and the net profit after tax was about NT $202.7 billion, with a profit margin of 41.3%, which is the highest among all chip companies in the world.
Not only chip companies, but also high-tech enterprises, such as Microsoft, Apple, Amazon, Google, Huawei, Alibaba, Tencent and so on, TSMC ranked first.
In terms of market capitalization, TSMC's market capitalization is as high as $445.2 billion, ranking first among all chip companies, surpassing Intel, Samsung, Nvidia and other enterprises, and even nearly three times that of Intel (Intel's market capitalization is $158 billion).
Finally, TSMC's revenue is expected to reach $18 billion in the second quarter, while Intel's previous forecast was $17.6 billion to $18.2 billion. Considering Intel's poor performance in this quarter, TSMC is very likely to surpass Intel and become the world's largest chip company by revenue.
In many people's eyes, contract manufacturing is low value-added, such as apple in the supply chain of contract manufacturers, earn less. However, taking TSMC as an example, we will find that OEM is not a "bitter haha" work, nor is it without advanced value of work, OEM to the extreme, far more than the brand manufacturers, earn more, live better.
It is no wonder that Samsung has been trying to overtake TSMC as the world's largest contract chipmaker because it is so profitable when it reaches its peak.