(Bloomberg) — Taiwan Semiconductor Manufacturing Co. posted its first quarterly shortfall in two years, signaling that the global decline in demand for electronics is beginning to catch up with the chip giant.
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The shortfall suggests that even TSMC, with its advantages in technology and scale, cannot escape a global slowdown in consumer spending hit by rising interest rates and accelerating inflation. Last year, the world’s largest contract chipmaker cut its capital spending plans by about 10% to $36 billion and some analysts have warned it could delay expansion spending even further. 2023.
TSMC, which is the exclusive supplier of Apple Inc.’s silicon chips for iPhone and Mac, may also have been affected by problems at the US tech giant’s assembly operations in China. Apple was forced to cut production estimates after Covid-related chaos at a factory in Zhengzhou exposed vulnerabilities in the company’s supply chain.
TSMC’s fourth-quarter revenue rose 43% to NT$625.5 billion ($20.6 billion), according to Bloomberg calculations based on monthly figures reported by TSMC. This missed the NT$636 billion predicted by analysts on average. TSMC said its December sales rose 24% to NT$192.6 billion.
Shares of Hsinchu-based TSMC, Taiwan’s most valuable company, fell 27% last year – after doubling during the pandemic – and are up about 8% this year. The global economic downturn has diminished consumer demand for many products that TSMC chips come in, but the company and its customers still expect the long-term trend in electronics demand to continue to rise.
Last month, TSMC launched mass production of next-generation chips and increased its investment in the US state of Arizona to $40 billion.
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TSMC is under pressure to diversify the geographical spread of its advanced chip manufacturing and is working with governments like the United States and Japan to develop a more global footprint. Global policymakers and customers are increasingly wary of their technological reliance on an island that Beijing has threatened to invade and have pushed TSMC to move some of its production overseas.
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