TSMC's second quarter revenue fell 10% as the company navigated customer inventory corrections, but the semiconductor maker was optimistic about AI-related demand.
Here's a look at the key takeaways from TSMC's earnings report.
- TSMC has seen an increase in AI-related demand for semiconductors, but it wasn't enough to offset weakness elsewhere. TSMC CEO Dr. CC Wei said the third quarter will see strength in its 3-nanometer technologies offset by inventory adjustments.
- Economic concerns in China and customers rebalancing inventory will be a headwind into the fourth quarter. TSMC's forecast for 2023 revenue calls for a decline of 10%.
- High performance computing and 5G is driving semiconductor demand in the long run. "Our revenue remains well on track to grow between 15% and 20% CAGR over the next several years in U.S. dollar terms," said Wei.
- 6% of total revenue for TSMC is related to AI processor demand. "We forecast this to grow at close to 50% CAGR in the next 5 years and increase to low teens percent of our revenue," said Wei.
- HPC is going to drive TSMC's long-term growth. "While the quantification of the total addressable opportunity is still ongoing, generative AI and large language model only reinforce the already strong conviction we have in the structural mega trend to drive TSMC's long-term growth, and we will closely monitor the development for further potential upside," said Wei.
- TSMC's Arizona fab will be delayed. The fab started construction in Arizona in April 2021 with an aggressive schedule. TSMC said it is now installing its most advanced equipment but doesn't have the skilled workers and local expertise to install equipment.
TSMC Chairman Mark Liu said:
"While we are working on improving the situation, including sending experienced technicians from Taiwan to train the local skill workers for a short period of time. We expect the production schedule of N4 process technology to be pushed out to 2025."
