When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works.

TSMC grapples with slowdown in demand as orders are reduced


Taiwan Semiconductor Manufacturing Company (TSMC), the world's leading foundry and chip manufacturer, has reportedly seen a slowdown in orders from its leading customers, affecting the company's results starting in the fourth quarter of 2022. This news comes despite the successful volume production of TSMC's 3nm technology with good yields.

According to DigiTimes, TSMC's utilization rate is expected to experience a significant drop in the first quarter of the year. This is reflected in the stacking of wafer banks, which has reached a new high, and a 15% reduction in orders from leading customers. Almost all of TSMC's clients are expected to experience a downturn and will need to reduce orders in the first quarter of 2023, leading to a significant decline in TSMC's utilization rate. This will affect all of TSMC's production lines, including those that use 7nm, 6nm-class technologies (N7-capable lines), which are expected to have a utilization rate of around 50% in early 2023.

TSMC's N5/N4-capable lines, which are typically used to produce advanced products like smartphone SoCs, are expected to be underutilized. The report also indicates that even TSMC's N28-capable fabs, which have been fully loaded since the beginning of the chip deficit in early 2021, will experience underutilization. The decrease in demand for advanced handsets in the first half of the year is likely contributing to this trend as popular products like the iPhone usually launch towards the end of the year.

Several factors, including a slowing economy in China due to COVID-related lockdowns and reduced demand for many products worldwide, have led to a decrease in the procurement of new chips from companies like AMD, Intel, MediaTek, and Nvidia by large computer hardware, PC, and smartphone manufacturers. As a result, fabless chip designers have reportedly been forced to cut their orders to TSMC.

The reported cuts in orders for TSMC are expected to take effect in the fourth quarter of 2022, which will lead to an increase in the company's inventories. It is not yet clear how these significantly reduced orders will impact TSMC's revenue for this quarter. However, DigiTimes estimates that TSMC's sales for the first quarter of 2023 will decrease by 15% quarter-over-quarter. This is in contrast to the first quarter of 2022, when TSMC's revenue exceeded its revenue for the fourth quarter of 2021 by 12.1%.

Source: DigiTimes (via Tom's Hardware)

Report a problem with article
Google voice labelling a suspected spam call
Next Article

Google Voice gains the ability to flag suspected spam calls

An illustration showing the new changes in Telegram Dec 2022 Update
Previous Article

Telegram's last update in 2022 adds new drawing tools, much-improved profile images, more

Join the conversation!

Login or Sign Up to read and post a comment.

9 Comments - Add comment