TSMC’s fourth-quarter sales missed analysts’ estimates, signalling the global decline in electronics demand is starting to catch up with the chip giant.
Revenue at the world’s biggest contract manufacturer of chips rose 43% to NT$625.5-billion (US$20.6-billion), according to calculations based on monthly numbers reported by TSMC. That missed the NT$636-billion predicted by analysts on average, the first miss in two years. TSMC said its December sales advanced 24% to NT$192.6-billion.
Hsinchu-based TSMC, Taiwan’s most valuable company, has been spending heavily to expand its output capacity and handle more orders. Yet, as electronics demand has plunged amid rising interest rates and accelerating inflation, TSMC last year reduced its capital spending plans by about 10% to $36-billion. Some analysts have warned it may further delay expenditure on expansion in 2023.
Shares of the company fell 27% last year — after doubling during the pandemic — and are up about 8% this year. The global economic slowdown has diminished consumer demand for many products that TSMC chips go into, but the company and its customers still expect the long-term trend in electronics demand to keep going up.
TSMC, which is the exclusive supplier of Apple Silicon chips for iPhones and Macs, last month kicked off mass production of next generation chips and increased its investment in the US state of Arizona to $40-billion.
TSMC is under pressure to diversify the geographic distribution of its advanced chip-making and is working with governments like the US and Japan on developing a more global footprint. Global policy makers and customers are increasingly leery of their technological reliance on an island Beijing has threatened to invade and have pushed TSMC to shift some production abroad. — (c) 2023 Bloomberg LP