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TSMC, confident on overcoming the chip decline

The chip giant from Taiwan believes it will turn around the economic slowdown on its prime product consumers demand!

But,TSMC projects this quarter’s revenue to decline as weak demand for consumer electronics takes its toll.

TSCM Tweet on latest market chip slump

TSCM chart on yearly revenue

The world’s largest contract chip maker finished 2022 on a high note.

But with a recession lurking around the corner in the U.S., 2023 will probably be a much more challenging year.

Taiwan Semiconductor Manufacturing Co., which counts most of the biggest chip designers including Apple Inc. and Nvidia Corp. as its customers, is a bellwether for the chip industry. And the signal it is sending is worrying—at least for the first half of 2023.

TSMC expects this quarter’s revenue to decline quarter-on-quarter as weak demand for consumer electronics takes its toll, the company said Thursday in its earnings briefing.

Profit could take an even bigger hit.

  • The firm projects its gross profit margin will be around 55%, compared with 62% last quarter.

TSMC will continue to invest in its most advanced nodes, though capital expenditures likely won’t go up from last year’s levels. It expects to spend between $32 billion and $36 billion this year, compared with $36.3 billion in 2022.

TSMC’s revenue slowed down last quarter but it managed to raise prices to offset the dropoff in demand. Its gross profit margin last quarter improved by nearly 2 percentage points quarter-on-quarter to 62%.

Counterpoint Technology Market Research expects revenue for the foundry industry to drop 5% to 7% year over year in 2023.

But TSMC remains confident that it will outperform the industry with a strong rebound in the second half. It forecasts its full-year revenue will still beat 2022 levels.

Image:Semiconductor chip