TSMC expects chip demand to decline in 2023

At the earnings conference call held today, TSMC released its second-quarter earnings report. The financial report shows that the consolidated revenue in the second quarter was approximate NT$534.14 billion (approximately RMB 12.05 billion), and the net profit after tax was approximate NT$237.03 billion (approximately RMB 5.347 billion).

TSMC said its 2022 sales (in U.S. dollars) are expected to grow by around 30%, and that production capacity will not be affected by delays in equipment supply this year. However, at present, customer demand still exceeds the company's supply capacity, and production capacity continues to be tight this year.

Regarding the prospect of chip demand, TSMC said that there will be a typical cycle of chip demand decline in 2023, but the overall decline will be better than in 2008. At the same time, the company expects customers to start reducing inventories, but currently, there are not many high-end smartphones in stock. Therefore, for TSMC, 2023 is still the "year of growth".

In addition, the company's growth in 2023 will be underpinned by advanced technologies, with high-performance computing (HPC) being the main engine of long-term growth. The company currently expects capacity utilization to remain good in 2023.

In terms of the timing of the next-generation chip production, TSMC reiterated that the company's 3nm (N3) chips will be put into production in the second half of this year and will contribute revenue in the first half of next year. It is worth mentioning that there are many derivative versions of TSMC's 3nm process, including N3, N3P, N3S, N3X, and N3E, which will be mass-produced in the next two or three years.

For the 2nm chip (N2), TSMC reiterated that it will achieve mass production in 2025. The 2nm chip is a major node for TSMC. The process will use nanosheet transistors (Nanosheet) to replace fin field effect transistors (FinFET), which means that TSMC’s process has officially entered the era of GAA transistors. Among them, the 2nm chip is 10~15% faster than the 3nm chip under the same power consumption. At the same speed, the power consumption is reduced by 25~30%.

TSMC's 5nm process wafer shipments accounted for 21% of the company's revenue in the second quarter (20% in the previous quarter), and 7nm process wafer shipments accounted for 30% of the company's revenue (30% in the previous quarter). ), the revenue of the 5nm process technology continued to increase this quarter, but it has not exceeded the revenue brought by the 7nm process technology. In addition, TSMC's advanced process (7nm and more advanced process) accounted for 51% of the total revenue, which continued to expand from 50% in the previous quarter.

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