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TSMC Reduces Expansion Plan to $36B as Outlook Dims
TSMC is cutting its 2022 capacity expansion budget in response to lower demand from smartphone and other consumer electronics makers.
www.eetasia.com, Oct. 17, 2022 –
Taiwan Semiconductor Manufacturing Co. (TSMC) is cutting its 2022 capacity expansion budget to $36 billion from the original $40 billion announced in July, as outlook for demand from smartphone and other consumer electronics makers dims.
The world's leading maker of advanced chips for Apple iPhones and other smartphones says demand for its leading-edge 7-nm chips has slumped, impacting the utilization rate of that node. The company offered no numbers on utilization–a key metric of profitability.
"While the ongoing semiconductor inventory correction will affect our first-half 2023 utilization rate, we expect our business to be supported by stronger demand for our differentiated, leading, and advanced specialty technologies" starting around the second half of 2023, TSMC CEO C.C. Wei said during the company's Q3 earnings call on Oct. 13 with industry analysts.
Wei said 2023 will be a growth year for TSMC, while the overall semiconductor industry will shrink. He declined to offer details. Utilization of TSMC's 7-nm and 6-nm nodes will drop through the first half of 2023 from the past three years, he added.
Slowdown comes on heels of solid growth
The slowdown reverses strong growth that started in 2020, when the Covid pandemic drove demand for expansion of datacenters and mobile electronic devices as part of the work-from-home trend. Semiconductor shortages have widely impacted systems makers including automobile and defense companies.
Half of TSMC's cut in capex this year is a result of shortages of chipmaking tools from suppliers like ASML, which ironically have been unable to buy enough chips to make their equipment.
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