TSMC to have its inventory correction pretty soon

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Taiwan Semiconductor Manufacturing Company has become the world’s top producer of chips. According to the latest info, the TSMC could soon face an inventory correction in the first half of next year. It was first projected for the second quarter of this year, then postponed to the second half, and now the investment research firm has further moved it ahead to 2022.

Analysts have reduced TSMC’s profit estimate by 10% but at the same time increased the chipmaker’s price target to 580 Yuan from an earlier 550 Yuan. Daiwa Capital Markets believe that the chipmaker will face a demand reduction next year due to an economic slowdown. But at the same is optimistic regarding the chip makers performance in the coming years.

Sources believe that by the end of 2022, TSMC will be back on a growth trajectory. The major factor contributing to the semiconductor sector’s growth this year and the next will be fifth-generation (5G) cellular networks and high-performance computing (HPC) platforms.

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Analysts believe that 5G smartphone shipments will grow by more than 100% year-over-year this year. Also, HPC devices will follow a compound annual growth rate (CAGR) of 21% until 2022 forecasts the firm.

As automakers worldwide are suffering due to the shortage of chips, they have turned towards TSMC for their chips. However, TSMC is facing a water shortage and an increased influx of orders from automakers. Though the world is leading towards the Taiwanese manufacturer, TSMC has its fair share of troubles. The fab is operating in a difficult environment, as it plans to jump from one chip node to another rapidly.

TSMC is building a new facility for a new manufacturing process. Referred to as N3 internally, it will reduce transistor dimensions over 5nm, and TSMC plans for it to enter mass production in 2022.

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The company’s chairman Dr Liu confirms that the 3nm manufacturing process is on track, but an inventory correction for 2022 stands the test of time. TSMC aims for a 70% 5nm increase by 2021 end to boost its output to 120,000 wafers/month.

Source

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