TSMC has reduced its full-year revenue forecast for 2023

Recently, TSMC announced its first-quarter 2023 financial results, which were lackluster. Due to the overall economic downturn and adjustments made by clients in response to weakened end-market demand, TSMC has revised its full-year 2023 revenue forecast downward from a slight increase to a decline of 1% to 6%, ending a 13-year streak of growth.

According to Digitimes, although TSMC has reduced its full-year revenue forecast for 2023, capital expenditures have not decreased, remaining in the range of $32 billion to $36 billion, demonstrating TSMC’s continued confidence in long-term growth. In fact, TSMC’s downward adjustment is lower than market expectations. Industry analysts suggest that in addition to exchange rate factors, TSMC had implemented cost-saving strategies a year ago and has now delayed the procurement of equipment and materials, already impacting the entire supply chain.

TSMC emphasizes that its 3nm mass production process is fully loaded and will contribute approximately 4% to 6% to annual revenue. However, due to Intel’s order delays and reductions, Apple is currently the sole client placing orders, with a slow monthly production increase. If demand for Apple’s new products is insufficient, the revenue generated by the 3nm process may fall short of expectations. Market concerns revolve around TSMC’s growth momentum in the second half of the year being overly dependent on Apple’s new models, posing significant risks. The current full-year 2023 revenue forecast adjustment may be overly optimistic.

Rumors suggest that among TSMC’s clients, three companies face potential financial troubles: MediaTek, which is continually reducing orders, and Qualcomm and Broadcom. These three manufacturers are impacted by the global slump in smartphone demand and previous excessive orders resulting in high inventory levels. Some industry insiders believe that TSMC may further revise its full-year 2023 revenue forecast downward in the second half of the year.

Many of TSMC’s competitors in the foundry sector ceased raising prices in the second half of 2022, with some even employing indirect methods to reduce prices. However, TSMC raised its prices by 20% in 2022 and another 6% in 2023. Excluding the additional revenue generated by consecutive price increases, TSMC’s current order and revenue declines are not insignificant.