28.1 C
Delhi

TSMC customers reduce their Orders due to economy slowdown

TSMC was almost impervious to the deteriorating high-tech industry in Q2 and Q3, but the party appears to be over even for the world’s largest contract chip manufacturer. According to DigiTimes, TSMC’s top clients have begun to adjust their orders to the company, impacting the foundry’s earnings beginning in the fourth quarter of 2022.

According to the research, practically all TSMC clients will experience a downturn and will be forced to cancel orders, resulting in a major decrease in TSMC utilisation in Q1 2023. For example, in early 2023, the utilisation rate of TSMC’s N7-capable lines (7nm, 6nm-class technologies) will be around 50%. Furthermore, TSMC’s N5/N4-capable lines will be underutilised, which is not surprising given that these are used to create cutting-edge goods, such as Apple’s smartphone SoCs, and demand for advanced handsets is typically lower in the first part of the year. Worryingly, even N28-capable fabs, which have been fully loaded since the start of the chip shortage in early 2021, will remain underutilised.

Large computer hardware, PC, and smartphone makers reduced their procurement of new chips from companies such as AMD, Intel, MediaTek, and Nvidia due to China’s slowing economy and COVID lockdowns, an economic downturn in numerous European countries, and reduced demand for many products in the United States.

TSMC
credit: tomshardware

Fabless chip designers were reportedly forced to reduce orders to TSMC.

The order reduction will take effect in Q4 2022, increasing TSMC’s inventory; however, it is unknown how the considerably lower orders would influence the company’s revenue this quarter. Meanwhile, DigiTimes predicts that TSMC’s Q1 2023 sales will fall 15% year on year. TSMC’s Q1 2022 revenue, on the other hand, topped its Q4 2021 revenue by 12.1%.

- Advertisement -TechnoSports-Ad

Cutting orders to a contract manufacturer is not easy because fabless chip designers are required to purchase a particular number of wafers in certain quarters. Nonetheless, TSMC is reportedly willing to accept compensation (by holding wafers with chips from AMD, Intel, Nvidia, and others until they are ready to buy them) and even renegotiate long-term supply contracts (i.e., increase the number of wafers that a company is committed to buying in the future). However, such actions will not make TSMC’s life any easier in Q4 2022 or Q2 2023.

Market experts are largely positive about advanced chip demand returning to normal in 2023. As a result, while TSMC is still predicted to report revenue growth for the year, sales growth may be less impressive than in 2021-2022.

Also Read:

- Advertisement -TechnoSports-Ad

source

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Nivedita Bangari
Nivedita Bangari
I am a software engineer by profession and technology is my love, learning and playing with new technologies is my passion.
TechnoSports-Ad

Popular

TechnoSports-Ad

Related Stories

More from author

The list of Airtel SMS packs as of March 28, 2024

Check out the list of Airtel SMS packs, including costs and validity information. We have shared a list of Airtel SMS recharge plans that...

My Jio Recharge Plans as of March 28, 2024: Top trending plans from Jio

My Jio Recharge Plans: Since its establishment in 2016, Reliance Jio has made a remarkable impact on the Indian te­lecommunications industry. The company has...

The Best Recharge Plan for Jio as of 28th Match 2024

Best Recharge Plan for Jio in 2024: The Ultimate Guide In the past few months, Jio has introduced and tweaked a slew of new...

Best Washing Machine in India (Fully Automatic) as of March 25, 2024

Best Washing Machine in India: A Complete Guide Every Indian household requires a washing machine. Our reliance on this home appliance is what allows our...