Analysts Anticipate Potential Decline in TSMC Revenue in the Near Future
August 29, 2023

Analysts Anticipate Potential Decline in TSMC Revenue in the Near Future

A broader slowdown in the global consumer electronics market coupled with weak demand for chip manufacturing could impact TSMC's revenue decline in 2024, according to analysts. While the significant orders from Nvidia and Apple will benefit the Taiwanese chipmaker, they are expected to help the company in the fourth quarter but not this year.

The market turbulence raises concerns about the ability of the TSMC factory to maintain its meteoric sales growth following the demand for electronics after the coronavirus epidemic, as mentioned by Wccftech.

Therefore, TSMC could see a revenue increase between seven and nine percent in the fourth quarter of this year based on the mentioned orders.

Although these percentages indicate growth, the company has revised its annual revenue guidance multiple times following the financial report for the second quarter. This has led to TSMC facing issues in building new factories, making headlines in the Taiwanese press.

Despite sticking to the report's guidance for now, news reports suggest that TSMC may experience another downturn in its finances. However, Apple is expected to have approximately 86 million orders for its phones in the next month, and Nvidia is also helping to fill TSMC's capacity for its latest semiconductor technologies to accelerate production.

As a result, revenues for the third quarter of 2023 are estimated to be between 16.5 and 17.5 billion dollars, while for the fourth quarter, they are projected to reach 18.6 billion. This represents a consecutive growth of eight percent, quarter over quarter.

However, the situation may be different in 2024. The US is currently facing record high inflation, and China's economic growth is constrained by technology sanctions. These factors contribute to a significant portion of TSMC's revenue, and the US forecast is clouded by concerns about rising interest rates and a potential recession.

Consequently, a decline in TSMC revenue is likely as these factors create uncertainty in business decisions, which may impact the Taiwanese factory. Furthermore, analysts predict a continued decline in demand for mid-range chips and non-automotive semiconductors next year.

In economic terms, the recovery follows an L-shaped pattern, where there is a sharp drop in output followed by a slow recovery. Additionally, wafer orders are declining, and industry sources anticipate that TSMC will offer up to a five percent discount based on procurement profiles.

Thus, the semiconductor market becomes even more uncertain as the leading factory encounters challenges. This uncertainty is exacerbated by the disruption in the global supply chain due to the sanctions against China, which was a significant buyer in this industry.