LONDON – Morris Chang, chairman and CEO of leading foundry chipmaker Taiwan Semiconductor Manufacturing Co. Ltd., has warned that a slowdown is coming to the chip market and has cut his forecast for the total semiconductor market's annual growth, according to reports.
Chang, speaking during TSMC's second quarter earnings conference on Thursday (July 19), disclosed a cut in the growth forecast for the global semiconductor market in 2012 to between 1 and 2 percent, the reports said. This is lower than recent forecasts from Future Horizons Ltd. (4 percent) and from International Data Corp. (4.6 percent).
Chang said the slowdown is set to start in the fourth quarter and last into the first quarter of 2013, and put it down to a renewed inventory correction and deterioration in the global economy, the reports said.
"We are now seeing a dip in our revenue in the fourth quarter from the third quarter," the Taipei Times quoted Chang as saying. Chang also sees a strong rebound in the second quarter of 2013 after the inventory adjustment.
TSMC posted strong revenue results and soaring profits for its 2Q12. The company expects to expand sales revenue by about 7 percent sequentially in 3Q12, which is roughly in line with TSMC's historical average for the third calendar quarter. Over the last ten years TSMC has averaged sequential third quarter revenue growth of 6.5 percent. Over the same period TSMC's fourth quarter revenue has, on average, dipped sequentially by 1.8 percent although it has grown by as much as 17.2 percent and contracted by as much as 30.6 percent.
Chang also confirmed that TSMC is negotiating with lithography equipment maker ASML Holding NV about investing in the company, according to a Dow Jones Newswires report. The Taipei Times said that TSMC maintained its advice it would spend between $8 billion and $8.5 billion on capital expenditure in 2012.
We've only just ended one inventory correction cycle and it turns out that in Q2 and Q3 inventory was and will be going back up!
Hence the necessity for a "correction" in Q4/Q1.
Meanwhile at the leading-edge node Qualcomm can't get enough chips!
That's the semiconductor market for you.
TSMC is still likely to show about 15% growth in 2012, not bad for an IC market expected to increase at a low single-digit rate.
Interesting to note that, because of the way TSMC defines its "capacity," the company ran at a 102% utilization rate in 2Q12! There may be a lot of speculation about Apple using TSMC as a foundry in the future but at this point, TSMC doesn't have much capacity to allocate to Apple.