(Bloomberg) — Taiwan Semiconductor Manufacturing Co., Apple’s main chip maker, has cut its 2023 capital spending outlook to deal with weak demand for smartphones and computing chips.
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Chairman Mark Liu told reporters after hosting the company’s annual shareholder meeting on Tuesday that capital spending should be near the lower end of the previously forecast range of $32 billion to $36 billion. TSMC reaffirmed its forecast that sales in the first half of 2023 will decline by about 10% in US dollar terms.
The milder forecast suggests TSMC, like its electronics industry rivals, remains cautious in the face of a sharp drop in consumer spending and an uneven post-COVID-19 recovery in China’s economy. are doing. The Taiwanese chip giant has previously said that semiconductor demand is likely to improve in the second half of the year after PC, server and smartphone makers run out of inventories.
One of the big questions facing TSMC and its peers is the extent of the global tech recession and whether China’s economy will recover strongly after the lifting of coronavirus measures. The company reaffirmed Tuesday that it expects sales to decline in the low to mid-single digits in 2023, which is broadly in line with expectations.
“We are in a destocking period, but customers are destocking and we are seeing a recovery in some end markets,” Liu said. “Sales may be slightly lower this year, but we are poised for strong growth starting next year.”
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Speaking Tuesday about TSMC’s long-term outlook, Liu expressed confidence in a broad sector recovery in 2024.
The world’s most advanced chip maker, which is also a key partner of AI chip design firm Nvidia Corp., said the proliferation of AI services on mobile devices would increase demand for advanced chips to train and host those apps. I am predicting. First, TSMC intends to double its packaging capacity for advanced chips, Liu told reporters.
Investors are betting that TSMC will become a strong player in the global race to develop next-generation AI. A top customer, his Nvidia chips are integral to ChatGPT, self-driving and the new generation of his AI products. Thanks to Wall Street’s obsession with generative AI, US companies’ valuations briefly topped $1 trillion last week, a fortune for TSMC and other electronics companies that supply the infrastructure needed to train AI models at scale. supported.
“Demand from AI is very exciting,” says Liu. “By 2022, high-performance computing will surpass smartphones in revenue for the first time, and the rise of generative AI will accelerate that trend.”
Liu also spent time distracting concerns that China’s growing aggression could jeopardize China’s future. Despite US warnings that Beijing may decide to invade and recapture islands it considers its own, Taiwanese companies are still producing cutting-edge manufacturing at home. U.S. and Chinese officials had a heated altercation at Singapore’s Shangri-La defense forum, highlighting growing rifts over the foundations of the world order.
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Over the past two years, TSMC has been diversifying its manufacturing bases to alleviate customer concerns about geopolitical uncertainty in the Taiwan Strait. The company has invested $40 billion to set up two factories in Arizona and is building an $8.6 billion facility in Japan with financial support from the government.
The company is still in talks with the Tokyo metropolitan government over subsidies for a potential second facility adjacent to its current plant in Kumamoto, Liu said on Tuesday. The company is also in talks with the Berlin government about a German complex, and some customers are likely to get a minority stake in the site, he said.
“TSMC aims to further secure customer trust through overseas diversification,” Liu said.
READ MORE: TSMC Expects Japan to Cover Half of $8 Billion Local Manufacturing Costs
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