TSMC’s top ten customers all have cut orders

In the second half of this year, the semiconductor supply chain market reversed, and upstream manufacturers were gradually affected. Hit by the downturn in the consumer market, sales of devices such as graphics cards, smartphones, and storage fell while inventory levels rose. As a leading company at the top of the semiconductor supply chain, TSMC is also inevitably affected, and news of customers delaying or cutting orders continues to spread.

TSMC 3nm process mass-produce

According to DigiTimes, Wei, president of TSMC, said that semiconductor inventory peaked in the third quarter of 2022, and began to be corrected in the fourth quarter, continuing until the first half of 2023. Capacity utilization will not pick up fully until the second half of 2023. Due to the economic downturn in many parts of the world and the continued weakness of terminal consumption, some people in the supply chain have a more conservative view. They believe that the supply and demand situation may not improve until the fourth quarter of 2023 or even 2024.

According to industry insiders, due to the poor market conditions in the first quarter of 2023, TSMC’s revenue may decrease by 15%, and if it is not for its 6% increase in foundry quotations, the decline may be even greater. Under the unexpected market conditions, many IC design companies have been revising orders since the third quarter of this year, and even breached the contract to accept compensation to minimize losses.

Due to the serious situation of customers cutting orders, delayed delivery and breach of contract, etc., TSMC has also conducted conditional negotiations with customers. In addition to accepting compensation, it is willing to accept major customers to renew contracts or make long-term commitments, which makes the customer’s inventory hit a new high.