Today, TSMC, the world's leading wafer foundry, released its second quarter financial report for 2022, with revenue of NT$534.14 billion in the quarter, a year-on-year increase of NT$43.5% and a month-on-month increase of NT$8.8%; net profit of NT$237.03 billion, a year-on-year increase of NT$76.4% and a month-on-month increase of NT$16.9%, exceeding the market's expectations of NT$219.81 billion. In addition, the gross profit margin was 59.1%, higher than the market expectations of 56.8%.
This is a very beautiful financial report. In contrast, Taiwan’s top ten chip suppliers are no longer unilaterally rising, and most of the performance in the second quarter began to weaken. Especially in June, according to statistics from IC Insights, a well-known semiconductor industry research organization, 7 out of 10 companies saw their performance decline year-on-year.
As a downstream smartphone and PC manufacturer, life is even more difficult as demand declines rapidly. Smartphones cut orders, and IDC data shows that global smartphone shipments fell by 8.9% in the first quarter; for PC, global PC sales fell by 5% year-on-year in the first quarter, and plummeted by 15.3% in the second quarter.
The entire consumer electronics industry chain presents a pattern of "lower cooling, medium temperature, and upper heat". However, this pattern is destined to be difficult to sustain.
Alarms are constantly
In the past 2020 and 2021, the impact of the epidemic has driven the outbreak of the online economy. Coupled with the rapid rise of new energy vehicles, the rapid rise of new energy vehicles has brought massive incremental demand for semiconductors, the industrial chain has shown a thriving development trend. PC sales continue to grow; 5G mobile phones are rapidly becoming popular; chip manufacturers and wafer foundries have achieved a thriving business performance, setting record highs.
However, in 2022, the external situation facing the industrial chain has undergone profound changes. Although the epidemic is still spreading around the world, it is no longer the main variable. The decline in consumer purchasing power caused by global inflation and economic recession. The conflict between Russia and Ukraine has further aggravated the above problems, causing consumer electronic products such as smartphones and PCs to face a "Davis double kill" with a decline in demand under the already high inventory.
The first alarm is the world's largest smartphone market - the Chinese market, the sales volume plummeted in the first quarter. Subsequently, the alarm sound continued: PC sales turned downward; mobile phone chips were sold at discounts; memory chip prices began to dive; Micron Technology delivered a thrilling second-quarter financial report, but said that its third-quarter performance dropped sharply; Taiwanese chip suppliers' performance continued to "spin" in June; Samsung repeatedly postponed the supply date of components, and the supply chain pointed out that Samsung's mobile phone channel inventory could be sold until next year; institutions predicted that TSMC's capacity utilization rate would be insufficient next year...
may be the only good news, that new energy vehicles have strong production and sales under the strong development of the Chinese market, and the corresponding supply of automotive semiconductors is in short supply. But local highlights are difficult to conceal the sluggish demand for global consumer electronics. A friend of the author revealed that his Argentine customer said that locals no longer buy computers, but preferentially purchase daily necessities. It is clear that in the environment of global historical inflation, the downturn in the consumer electronics market will continue.
The boss speaks out: It must be weaker
The latest warning comes from a big boss with rich experience in the industry chain: Chen Junsheng, Chairman of Acer Group. He is the world's fourth largest PC manufacturer, and has served as Intel's global vice president and TSMC's senior vice president, and has a very transparent understanding of the industry chain.
Chen Junsheng revealed that many of the latest CEOs who make semiconductor hardware called him and asked Acer "whether to buy it or not," because Acer "has the best inventory and the safest." In contrast, when chip shortages were short, semiconductor factories were all very stanced. They had to visit the general manager or above to buy goods, and even "if they didn't answer the phone, they couldn't find anyone."
This shows that the chip has gradually shifted from the extremely short seller's market to the buyer's market. Chen Junsheng believes that the second half of the year must be weaker than the same period last year. Some people say that it is now "cold lower, medium temperature, and high heat", which is actually caused by the long whip effect. The downstream Acer has seen a change in terminal demand, but the midstream and upstream semiconductor manufacturers are not worried and believe that there is a guarantee of long-term contracts.
In fact, this change is drastic.Many chip manufacturers would rather break their contracts than cut off their OEM orders to focus on digesting high inventory. TSMC's performance is still good and has announced that it will continue to increase prices next year. In the situation of oversupply, will the industry definitely pay?
Chen Junsheng also expressed concerns about the significant expansion of wafer foundries such as TSMC. In Taiwan alone, 20 12-inch wafer fabs have been built one after another, with a total investment of approximately NT$2.4 trillion, exceeding the total budget of Taiwan Province for one year. If the capacity utilization rate cannot be improved in the future, it will be very dangerous. "If this train goes on like this, it will hit the wall, and it will definitely be full of blood!"
Highlights in the Chinese market
The semiconductor industry has or is about to face a difficult situation, but there are also highlights, especially the Chinese market. The continued rise of new energy vehicles takes the lead; the high-level recovery of the economy has driven the demand for various chips and showed greater vitality.
According to a recent report released by Bloomberg, statistics show that in the past four quarters, China's chip industry has grown faster than any other region in the world. Among the 20 fastest-growing chip companies in the world, 19 are from China.
From a global perspective, the situation of "lower cooling, medium temperature, and upper heat" will not continue, and it is more likely to be a new balance. Over the past 20 years, wafer foundry, chips, and terminal manufacturers have always had a dynamic voice in the industrial chain. The market level will also be rebalanced: the Chinese market is a stronger engine and will be the key to maintaining prosperity in the semiconductor industry in the future. (C114 Liu Dingzhou)
