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TSMC might not make much cash after all

by on18 September 2023

Customer demand slumping

TSMC told its major suppliers to delay the delivery of high-end chipmaking equipment after it started getting nervous about customer demand.

Shares in TSMC suppliers including Dutch-based ASML declined after news got out.

TSMC sources said the company is grappling with delays at its $40 billion chip factory in Arizona, and wants to control costs as it expects demand to fall.

Suppliers currently expect the delay to be short-term and TSMC did not comment on what it claimed was a "market rumour".

ASML CEO Peter Wennink said some orders for its high-end tools had been pushed back, without saying who by, and that he expected it would be a "short-term management" issue.

"We've had several reports about fab readiness. Not only in Arizona ... but also in Taiwan," Wennink told Reuters, referring to preparations for chip manufacturing.

Analyst Michael Roeg of Degroof Petercam said: "There has been a lot of excitement about artificial intelligence and the implications for the semiconductor industry," he said, adding that AI was positive for TSMC, which makes chips for NVIDIA. However the strength in demand for AI chips is not strong enough to compensate (for) what is happening in other segments."

Mobile phone, laptop, industrial and more recently automotive chips as problem areas were all sluggish.

TSMC has been forced to push back production at the Arizona plant by a year to 2025, as it struggled to recruit workers and faced pushback from unions on efforts to bring in workers from Taiwan.

The Taiwanese chip giant is not alone in worrying a bounceback in demand may take longer than expected. Fruity cargo cult Apple launched a new series of iPhones this week that included a faster chip, but it did not raise prices, on the grounds that there is a smartphone slump and products had to be pretty special before people would upgrade.

Last modified on 18 September 2023
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