Apple chip supplier TSMC tempers 2023 capital expenditure outlook to US$32 billion as global semiconductor demand weakens
- TSMC’s capital spending should wind up closer to the bottom end of a previously forecast US$32 billion to US$36 billion range, chairman Mark Liu said
- It reaffirmed projections for revenue in the first half of 2023 to decline by about 10 per cent in US dollar terms
TSMC’s capital expenditure should wind up closer to the bottom end of a previously forecast US$32 billion to US$36 billion range, company chairman Mark Liu told reporters after hosting the firm’s annual shareholders’ meeting on Tuesday.
It reaffirmed projections for revenue in the first half of 2023 to decline by about 10 per cent in US dollar terms.
The Taiwanese chip linchpin has said previously semiconductor demand is likely to improve in the latter part of this year, after personal computer, server and smartphone makers digest inventories.
The company reaffirmed on Tuesday it expects a low- to mid-single-digit revenue decline in 2023 – about in line with estimates.
“The company is undergoing an inventory adjustment period, but customers are lowering their inventories and we are seeing recovery in some end markets,” Liu said. “We may see our sales drop slightly this year, but our company is ready to capture strong growth starting next year.”
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On Tuesday, Liu talked up TSMC’s longer-term prospects while expressing confidence about a broader 2024 sector recovery.
For starters, TSMC intends to double its advanced chip packaging capacity, Liu told reporters.
Nvidia’s valuation briefly surpassed US$1 trillion last week, thanks to Wall Street’s obsession with generative AI, propping up the fortunes of TSMC and other electronics firms that supply the infrastructure needed to train large AI models.
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“Demand from AI is very exciting,” Liu said. “In 2022, sales from high-performance computing surpassed smartphones for the first time. The rise of generative AI will firm up that trend.”
Liu also spent time deflecting concerns that growing Chinese aggression might jeopardise its prospects.
The Taiwanese company still keeps its most advanced manufacturing at home, despite US warnings that Beijing might decide to invade and try to retake an island it considers its own.
TSMC in talks for German subsidies that could cover half of a new fab
To mitigate concerns from customers over geopolitical uncertainties in the Taiwan Strait, TSMC has been diversifying its manufacturing footprint over the past two years. It is investing US$40 billion to create two fabrication plants in Arizona and constructing an US$8.6 billion fab in Japan with financial support from the government.
The company remains in discussions with Tokyo over subsidies for a second facility, which might be located alongside its current plant in Kumamoto, Liu said on Tuesday. It is also in discussions with the Berlin government about a manufacturing complex in Germany and some customers are likely to obtain a minority stake in the site, he said.
“TSMC aims to further secure customers’ trust with overseas diversification,” Liu said.
