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Chip giant TSMC cuts revenue outlook as market slump persists and smartphone and PC demand slides
- TSMC is projecting a 10 per cent fall in sales this year and a weaker-than-expected third-quarter revenue of US$16.7 billion to US$17.5 billion
- The chip maker for Apple and Nvidia faces multiple challenges, including declining profit last quarter, weak consumer spending, and delays at a new plant
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Taiwan Semiconductor Manufacturing Co (TSMC) trimmed its outlook for 2023 revenue, sending a warning to investors that the global electronics slump may persist for some time despite a boom in AI development.
The main chip maker for Apple Inc and Nvidia Corp projected a 10 per cent fall in sales this year, versus a previous guidance for a single-digit decline. It also projected sales of US$16.7 billion to US$17.5 billion this quarter, weaker versus expectations. The company reaffirmed that 2023 capital expenditure should come in toward the lower end of a previously forecast range of US$32 billion to US$36 billion.
TSMC delivered the outlook after posting its first quarterly profit decline in four years, underscoring the extent of a global slide in smartphone and PC demand. It reported a 23 per cent slide in net income to NT$181.8 billion (US$5.85 billion). Executives on Thursday said they were also pushing back the anticipated start of output from its new Arizona plant to 2025, partly because of a shortage of skilled workers.
Still, that drop was less than feared. The company is viewed among the earliest beneficiaries of efforts from the US to China to develop artificial intelligence platforms. The Taiwanese company, which makes the Nvidia chips considered most effective at training AI such as ChatGPT, has gained some 30 per cent in value this year as investors hunt for ways to bet on the emergent technology.
More immediately, the iPhone chip maker is struggling to sustain margins and growth in its smartphone and consumer-oriented business, which has shrunk alongside a global post-Covid economic downturn. TSMC reported a 10 per cent decline in second-quarter revenue last week, a little narrower than feared.
Samsung Electronics Co this month reported its worst decline in quarterly revenue since at least 2009, stoking uncertainty over when a year-long electronics demand slump will end. Global smartphone shipments plunged 11 per cent in the April to June period, the sixth successive quarterly decline, research firm Canalys estimates.
But backlogs of unsold phones are shrinking. And this week, ASML Holding NV revealed orders rose in the second quarter after demand for its chip-making machines picked up.
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