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TSMC is waiting for investment cuts: the reasons
Taiwan’s TSMC Corporation, the world’s largest manufacturer of semiconductor products, announced a reduction in investment in the business. The reason for such a decision was the drop in demand for microchips and, as a consequence, the forecast reduction in the company’s revenue. According to the forecasts, in the first half of the year, the revenue should decrease by 5%.
It should be noted that the decline in demand is a global trend associated with a slowing economy. Apple corporation, which is the main customer of TSMC, also announced the decline of interest in the products. The record inflation rate, increase in interest rates, and decrease in the consumer power of the population have already affected the technological sector. At the same time, according to some analysts, growth in the market should resume in the second half of 2023. Representatives of TSMC are also inclined to such an estimation. They believe that a good jump in the development of the sector will give the output of new products based on artificial intelligence.
In 2022, the Taiwanese manufacturer had capital expenditures of $36.3 billion. In 2023, the figure will be in the range of $32-36 billion. The company’s capitalization is about $611 billion, which makes it the most expensive in the Asian region.
TSMC was founded in 1987 by Maurice Chang and is the global market leader in the contract manufacturing sector of semiconductor products. In addition, the corporation has developed a large number of innovative solutions, without which it is difficult to imagine the functioning of modern technology. For example, TSMC created the process for the production of 7 nm chips, and from 2020 it began manufacturing 5 nm chips.
The latter technology makes it possible to increase the performance of devices while reducing the amount of energy required by about 30%. This development is important for improving the performance of various devices and specialized technical equipment. Also in the process of testing is the manufacturing process of 3 nm microchips.
TSMC now has a 90% share of the 10nm, 7nm, and 5nm chip manufacturing segments. In addition, about 65% of the 28-65nm chips used in the automotive industry also belong to TSMC. The company has earned its leadership by always emphasizing innovation first. The business allocated large funds for research activity, due to which it managed to be ahead of competitors.
In 2021 the corporation invested 25 billion dollars in the development of its own business, which exceeds the investment of its competitors – Intel and Samsung. In 2022, TSMC allocated funds to expand production capacity in the United States.
The Taiwanese corporation supplies products to the largest players in the technology market, including Apple, NVIDIA, AMD, and others. It can be argued that the production of devices, without which it is difficult to imagine modern life, depends on TSMC.