- TSMC attributed the reduced figures to macroeconomic headwinds, lower end-market demand, and ongoing inventory adjustment by customers
- The chipmaker expects a recovery in the smartphone market to boost its third-quarter revenue to $16.7-$17.5 billion.
Taiwan Semiconductor Manufacturing Company (TSMC) reported a 10% drop in revenues from a year ago to NT$480.84 billion, while net income fell 23.3% from a year ago to NT$181.8 billion in Q2 2023 due to a decrease in demand for consumer electronics.
The decline in net income is the first quarterly decline since Q2 FY19. TSMC attributed the reduced figures to macroeconomic headwinds, lower end-market demand, and ongoing inventory adjustment by customers.
In the second quarter, shipments of 5-nanometer accounted for 30% of total wafer revenue, and 7-nanometer accounted for 23%. Advanced technologies, defined as 7-nanometer and more, accounted for 53% of total wafer revenue.
Factoring the causes of the fall
The global demand for laptops and smartphones has decreased post-pandemic, leading to excess inventories and falling chip prices. After six consecutive quarters of decline, the smartphone market has shown signs of recovery as vendors prioritise clearing old inventory for new launches.
The chipmaker expects a recovery in the smartphone market to boost its third-quarter revenue to $16.7-$17.5 billion. The company anticipates business support from scaling its 3-nanometer technologies as its largest customer, Apple, is rumoured to be ordering chips based on the 3-nm process technology for its upcoming iPhone.
The company has been grappling with a capacity shortage caused by the surge in demand for AI-related processors. TSMC has planned to double its high-end packaging capacity to address this issue despite anticipating the persistence of the capacity shortage until the end of next year. Nonetheless, TSMC has remained optimistic about the long-term growth potential of the AI-related processor business, with an expected annual growth rate of close to 50% over the next few years.