TSMC grapples with slowdown in demand as orders are reduced

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s main foundry and chip producer, has reportedly seen a slowdown in orders from its main clients, affecting the corporate’s outcomes beginning in the fourth quarter of 2022. This information comes regardless of the profitable quantity manufacturing of TSMC’s 3nm expertise with good yields.

According to DigiTimes, TSMC’s utilization charge is anticipated to expertise a major drop in the primary quarter of the 12 months. This is mirrored in the stacking of wafer banks, which has reached a brand new excessive, and a 15% discount in orders from main clients. Almost all of TSMC’s shoppers are anticipated to expertise a downturn and might want to scale back orders in the primary quarter of 2023, resulting in a major decline in TSMC’s utilization charge. This will have an effect on all of TSMC’s manufacturing strains, together with people who use 7nm, 6nm-class applied sciences (N7-capable strains), which are anticipated to have a utilization charge of round 50% in early 2023.

TSMC’s N5/N4-capable strains, which are sometimes used to supply superior merchandise like smartphone SoCs, are anticipated to be underutilized. The report additionally signifies that even TSMC’s N28-capable fabs, which have been absolutely loaded because the starting of the chip deficit in early 2021, will expertise underutilization. The lower in demand for superior handsets in the primary half of the 12 months is probably going contributing to this pattern as widespread merchandise just like the iPhone often launch in the direction of the top of the 12 months.

Several components, together with a slowing economic system in China as a result of COVID-related lockdowns and reduced demand for a lot of merchandise worldwide, have led to a lower in the procurement of latest chips from firms like AMD, Intel, MediaTek, and Nvidia by giant pc {hardware}, PC, and smartphone producers. As a end result, fabless chip designers have reportedly been pressured to chop their orders to TSMC.

The reported cuts in orders for TSMC are anticipated to take impact in the fourth quarter of 2022, which is able to result in a rise in the corporate’s inventories. It isn’t but clear how these considerably reduced orders will influence TSMC’s income for this quarter. However, DigiTimes estimates that TSMC’s gross sales for the primary quarter of 2023 will lower by 15% quarter-over-quarter. This is in distinction to the primary quarter of 2022, when TSMC’s income exceeded its income for the fourth quarter of 2021 by 12.1%.

Source: DigiTimes (through Tom’s Hardware)


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