TSMC is facing a slowdown in demand as orders are cut



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

According to DigiTimes, TSMC’s utilization rate is expected to experience a significant decline in the first quarter of this year. This is reflected in the accumulation of slice banks that reached a new high and a 15% reduction in orders from leading customers. Almost all of TSMC’s customers are expected to experience a decline and will have 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 using 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-enabled lines, which are typically used to make high-end products like smartphone SoCs, are expected to be underutilized. The report also suggests that even TSMC’s N28 devices, which have been fully charged since the chip shortage began in early 2021, will experience underutilization. Declining demand for high-end devices in the first half of the year may contribute to this trend, as popular products like the iPhone typically launch Towards the end of the year.

Several factors, including a slowdown in China’s economy due to COVID-related lockdowns and reduced demand for many products worldwide, have led to a decline in purchases of new chips from companies such as AMD, Intel, MediaTek and Nvidia by major computer hardware, PC and smartphone manufacturers. As a result, legendary chip designers were reportedly forced to cut their orders to TSMC.

The reported order cuts for TSMC are expected to take effect in the fourth quarter of 2022, leading to an increase in the company’s inventory. It remains unclear how the significantly reduced orders will affect TSMC’s revenue this quarter. However, DigiTimes estimates that TSMC’s Q1 2023 sales will be down 15% quarter over quarter. This is in contrast to the first quarter of 2022, when TSMC’s revenue exceeded its revenue in the fourth quarter of 2021 by 12.1%.

source: DigiTimes (Through Tom’s hardware)


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