According to allegations in the Taiwanese press, the Taiwan Semiconductor Manufacturing Company (TSMC) has reduced the number of suppliers it orders from. TSMC reduced capital expenditures for 2022 early this year and cited a lack of demand forecasting as the main cause.
The company is suffering an industry slowdown as its clients struggle with a downturn in demand. The latest rumor concerning the cutting-edge chip manufacturing technique set to go into production in the current quarter is that the company has also considerably decreased its forecasts for 3-nanometer output this year.
The United Daily News (UDN), which provided the article, makes the speculative claim that TSMC has begun to reduce its supplier orders. These orders, which are at the backend or upstream of the semiconductor manufacturing supply chain, involve a wide range of goods, including silicon wafers and other consumables that TSMC needs to maintain its machines in operation.
According to UDN’s sources, TSMC has decreased these orders by as much as 50%, with the decrease occurring after the fab slashed its spending. The order reduction has shocked the chip industry as a whole because the company is crucial to it as Taiwan’s largest and leading chipmaker.
Inventory adjustments have affected TSMC and the semiconductor industry this year as well, and the company anticipates that these conditions will continue and possibly climax in the first quarter of 2019.
However, the chipmaker has experienced significant demand for its cutting-edge 3-nanometer technology. During a recent earnings call, the chipmaker’s CEO, Dr. C.C. Wei, stated that the tape-outs for 3nm are more than twice as many as those TSMC received for older technologies. Tape-out is a term used in the chip manufacturing business to describe the finalized design that is provided to the chipmaker so that the latter can adjust its machinery to the product.
Suppliers to TSMC claim that the order flow began to decline in the previous quarter and has since persisted into both the current quarter and the first quarter of 2019. In its most recent earnings report, TSMC disclosed that it is having trouble finding chipmaking equipment, particularly to meet client demands and that this, coupled with a slowdown in the industry, is causing the company to cut spending.
The picture portrayed by UDN on the subject of a 3-nanometer is also not very favorable. According to its sources, the monthly average output for the new technology was originally expected to be 44,000 wafers, but it has already decreased by a staggering 34,000 wafers to 10,000 wafers, a 77% decrease.
Reduced orders from Apple and Intel are major contributors to this decline. Intel’s technology is also experiencing delays, and Apple chose to introduce its M2 personal computers in March. This means that TSMC won’t provide any processors for Apple this year, and given that Intel is also experiencing delays, orders for its products that utilize some of TSMC’s chips will also arrive later.
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