TSMC It Is Predicted To Lose Cuan At The Start Of The Year Due To The Great Client's Order Revision

JAKARTA - Taiwan Semiconductor Manufacturing Company (TSMC) is likely to experience a decline in revenue in the first quarter (Q1) 2023. This is because some of its clients have decided to reduce the number of wafer orders for their chips.

Chip suppliers as well as large clients, such as AMD, Intel, MediaTek and Nvidia were forced to cut their orders to TSMC due to the economic slowdown in China as well as the country's COVID-19 lockdown, and the economic recession in many European countries.

It doesn't stop there, reduced demand for many products in the United States, such as large computer hardware, PCs, and smartphone makers lowering their new chip procurement from these companies.

Since their orders were revised, it would obviously affect the results of the casting starting from Q4 2022, so that the wafer TSMC put in will not be used, making its revenue significantly decreased in Q1 2023.

For example, N7 ( 7nm class technology, 6nm) will be underused, resulting in a 50 percent decline in revenue in early 2023.

In addition, the N5 and N4 capabilities also suffered the same fate, although this may not be surprising because it is used to make leading products, such as Apple's smartphone System on Chip (SoC), and demand for advanced handsets usually drops in the first half of this year.

However, what is even more worrying is that the N28 fabrication, which has been fully occupied since the beginning of experiencing a chip deficit in 2021, will also be less utilized.

The order cuts are known to take effect in Q4 2022, which will increase TSMC's inventory, although it's unclear how a significant reduction in orders will affect the company's revenue this quarter.

Meanwhile, DigiTimes, who reported the incident, was quoted as saying by Tom's Hardware, Tuesday, January 3, predicts sales in Q1 2023 TSMC will fall 15 percent from quarter to quarter. In contrast, TSMC's Q1 2022 revenue exceeds Q4 2021 revenue by 12.1 percent.

The act of revising orders is not trivial, as an extraordinary chip designer is obliged to get the number of wafers that remain in certain places.

Even so, TSMC was reportedly willing to accept compensation for holding wafers with chips from AMD, Intel, Nvidia, and others, before they were ready to buy them.

Even renegotiating the long-term supply contract deal instead. Unfortunately, such actions are quite detrimental to TSMC in Q4 2022 or Q2 2023.