According to reports from Taiwanese media, TSMC (TSMC) has cut orders to suppliers. The company is facing an industry slowdown as customers struggle with slowing demand, and also cut capital expenditures for 2022 earlier this year, which the company said lack of demand forecasts was the main reason for the shrinkage. Now, it is rumored that the company has also significantly lowered its 3-nanometer production forecast this year, the latest speculation around the advanced chip manufacturing technology planned to be put into production this quarter: TSMC's average 3-nanometer monthly output will drop by 77%.
Today's report was provided by United News Network (UDN), which speculated that TSMC has begun to cut orders from its suppliers. These orders form the back-end or upstream of the semiconductor manufacturing supply chain, and they involve various products such as TSMC purchasing silicon wafer and other consumables to keep their machines running.
UDN sources believe that TSMC has reduced these orders by as much as 50%, and orders have also been reduced after the factory cuts spending. Due to the key nature of the company as Taiwan’s largest and leading chip manufacturer, order cuts have also brought shock waves to the entire chip industry.
TSMC and the chip industry have also been facing inventory corrections this year, and the company expects these situations to continue and may peak in the first quarter of next year. However, the chipmaker saw strong demand for its leading 3nm technology, with its CEO Dr. Wei Zhejia outlined on a recent earnings call that the 3nm technology has more than twice the tape-out volume than TSMC's early technology. In the chip manufacturing industry, tape-out refers to the final design of companies such as AMD, which is sent to chip manufacturers so that the latter can customize their devices based on the product.
TSMC's third quarter financial report for 2022 shows that although the revenue contribution of old technologies has declined, its latest 5-nanometer products have successfully grown
According to TSMC's suppliers, order flow began to weaken in the last quarter, and this situation continued until this quarter and into the first quarter of next year. TSMC shared in its latest earnings that it faces difficulties in purchasing chip manufacturing equipment, especially keeping up with customer orders, coupled with industry slowdowns, forcing the company to reduce spending.
Regarding the topic of 3 nanometers, the picture depicted by UDN is not very good either. Its sources show that the monthly average capacity of new technology, , was previously expected to be 44,000 pieces, and now it has dropped by 34,000 pieces, leaving only 10,000 pieces, a 77% drop. The main reason behind this decline is the decrease in orders from Apple and Intel - Intel's own technology is also facing delays, and Apple chose to launch its M2 PC in March. These mean TSMC will not produce any chips for Apple this year, and since Intel itself is also facing delays, its products using some of its TSMC chips will not see orders flow later.
Today’s report is the latest reality that the chip industry’s outlook is turning to a bleak, which was one of the best performers as a result of the coronavirus pandemic and the automotive industry boom, causing chip manufacturers to fail to bottom out after the coronavirus pandemic and the auto industry.
