At the beginning of this year, the falling demand for desktop PCs, notebooks, and smartphones has had financial consequences for TSMC, the world’s largest chip manufacturer. The company’s sales have continued to decline, resulting in less profit than the previous quarter and year for the first time since 2019. The forecast for sales is also lower than last year’s numbers.
In the second quarter, TSMC reported sales of $15.68 billion, a 6.2 percent decrease from the previous quarter and a 13.7 percent decrease from the same period last year. The falling revenue can be attributed to inventory corrections at customers such as Apple and AMD, who are facing decreased user demand. Apple, in particular, has experienced falling sales and profits recently.
Along with sales, TSMC’s profits have also fallen. Operating profit is down 23 percent year-on-year, and net profit is down 23.3 percent compared to 2022. TSMC expects sales of between $16.7 and $17.5 billion for the third quarter, which is 14 to 18 percent lower than the same period last year, when the company achieved $12.2 billion in profit.
Despite the challenges, TSMC’s Chief Financial Officer, Wendell Huang, expects revenues from 3-nanometer production to begin in the third quarter. The company currently generates 30 percent of its revenue from 5 nm wafers and 23 percent from 7 nanometers. Apple is expected to be one of the first buyers of the 3nm chips for the new iPhone launching this fall.
In addition to the sales decline, TSMC is facing delays with its new chip factories in Arizona, USA. The shortage of skilled workers has caused the start of production to be postponed to 2025. TSMC had tripled its investments in the US at the end of last year, and the expansion of production in Arizona was planned for 3nm and 4nm technologies. However, production for N4 technology has been delayed to 2025, while the second chip factory for 3nm is scheduled to start manufacturing in 2026.
Despite the challenges and delays, TSMC remains optimistic about the future, with hopes for improved sales and the launch of new chip technologies in the coming quarters.
