TSMC accepts customer orders to be appropriately reduced or delayed
Recently, the semiconductor supply chain market has reversed, and upstream manufacturers have gradually been affected.
At present, the inventory level of many manufacturers has soared to a new high in the past ten years, and they have to cut orders in large quantities, or at least delay orders to minimize losses. Similar strategies quickly spread downstream to upstream, affecting the entire supply chain. In the face of the industry’s predicament, TSMC also accepts the request to reduce or delay orders appropriately but is unwilling to discount or restore the business model of past sales discounts, except for the most extensive customer Apple, there is no room for negotiation. TSMC is also facing the pressure of inflation and needs to maintain the expansion of production capacity, research, and development of advanced process and packaging technology, only by increasing prices can the gross profit margin be maintained above the target of 53%.
Although the semiconductor industry faces various unfavorable factors, investment institutions are optimistic about the future of TSMC, among which Goldman Sachs also raised the target share price of TSMC from NT$750 to NT$780. Although TSMC’s 6nm/7nm capacity utilization has been on a downward trend, 4nm/5nm capacity is still strong due to large orders from Apple, Nvidia, and AMD, improving TSMC’s profitability. In addition, mature processes like 28nm are still fully loaded.
TSMC’s revenue in the fourth quarter of this year is expected to be flat, and it will not gradually resume growth until it starts shipping 3nm chips in the second quarter of next year.