What just happened? Even the biggest tech giants are not immune from the effects of the stuttering global economy and declining consumer demand: The Taiwanese semiconductor Manufacturing Company (TSMC) just missed quarterly revenue forecasts for the first time in two years.
The global economic crisis caused by the rapid rise in inflation, rising interest rates and rising cost of living has led to the fact that many consumers have reduced their secondary expenses, especially when it comes to expensive technical goods.
Samsung, which has often weathered storms in times of economic uncertainty thanks to its vast portfolio, recently saw its quarterly profit fall to an 8-year low. As Bloomberg reports, TSMC, the world’s largest contract chip manufacturer, is also feeling the heat. Despite the fact that revenue in the fourth quarter increased by 43% to 625.5 billion Taiwan dollars ($ 20.6 billion), it still did not meet analysts’ expectations of 636 billion Taiwan dollars, which was the first time in two years when the company did not meet forecasts.
Reports last month claimed that the utilization rate of TMSC’s 7nm and 6nm factories is expected to drop to 50 percent as customers order fewer wafers, while the 28nm factories that remain at capacity as of the third quarter of 2022 will begin to slow down towards 2023 year. It is also reported that the firm is reviewing contracts with AMD, Nvidia and MediaTek customers, who are reducing orders in the face of falling demand for their products. Covid-related disruptions at Apple supplier Foxconn’s Zhengzhou plant also affected TSMC.
The situation is unlikely to improve in the near future. TSMC’s revenue is expected to decline by 15% in the first quarter of the year, and another drop will occur in the second quarter of 2023. The long-term outlook is more optimistic, although some analysts believe the company may cut costs on its expansion plans this year, as it did in 2022; last year TSMC planned to spend $44 billion on capacity upgrades, but this figure was lowered to $36 billion.
TSMC is investing billions in its U.S. facilities; its location in Arizona will include an upgraded 4nm factory and a 3nm factory to produce the most advanced chips. The Chinese nationalist tabloid Global Times is not happy with the investment, calling it a “black turn” in the global semiconductor industry. The publication even claimed that the US “deceived” TSMC, forcing it to build factories in Arizona, and steal technology from Taiwan.