This week, Taiwanese company TSMC opened its earnings season, and its status as a leader in custom chip manufacturing services allows it to adequately forecast trends characteristic of the entire semiconductor industry. Management forecast a 4% decline in revenue for the year for the industry as a whole, but TSMC expects to end the period on a positive revenue trend.
More specifically, in the first half of the year, the company expects sales to fall by 5-9%, but in the second half of the year, sales will be higher than the same period last year, the demand recovery will be “healthy”, as noted by TSMC officials. If the entire industry, excluding memory chip shipping, cuts year-end revenue by 4%, the custom chip manufacturing segment will decline 3%, according to CEO CC Wei. In dollar terms, TSMC’s revenue is likely to increase slightly in 2023, he added.
When this statement was of interest to those attending the quarterly reporting conference, Xi Xi Wei added explainedthat the smartphone and PC market will still decline this year in terms of the number of devices shipped, but at the same time the specific proportion of chips in each device will continue to grow. This alone can partially compensate for the decline in sales of end devices. Secondly, TSMC will continue to offer new products and cover new market segments, which will also increase sales.
At the same time, the head of TSMC does not hide the fact that the shortage of automotive chips continues and demand for them is growing. The supply situation is improving, but TSMC cannot yet fully meet the demand for automotive chips. By the end of the year, TSMC will definitely increase the supply volume of chips for the needs of the automotive industry.
As company officials explained at the event, of this year’s planned investments of US$32-36 billion, about 70% will go to advanced lithography, 20% to specialized technical processes (mostly mature) and the remaining 10% will spent on the development of services for advanced chip packaging options, the purchase of technological equipment and other needs.
The TSMC management paid particular attention to the development of mature technical processes, which are considered technological standards from 28 nm. First, the range of technical processes that will be used in the plant under construction in Japan was clarified. It will use 28nm, 22nm, 16nm and 12nm process technologies and start production by the end of 2024. Incidentally, the TSMC plant in China is also expanding the production of 28nm products, and the existing US sanctions restrictions simply do not apply to this area.
In general, TSMC is willing to move up to 20% of its capacity to manufacture chips with mature technologies outside of Taiwan in the next five years. This obviously also applies to a possible company in Europe, because European car manufacturers need such chips. Of course, the decision to start new companies outside of Taiwan is made based on the willingness of other countries’ governments to subsidize core projects and sufficient demand in the local market. As TSMC officials explained, in the United States the cost of building enterprises is four or five times higher than in Taiwan, and it is desirable to compensate for this very difference with government subsidies. The cost of manufacturing chips in the United States, as already mentioned, is only one and a half times higher.