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Demand is tight! TSMC has told suppliers it will delay chip equipment deliveries

The world's top contract chipmaker has told its major suppliers it will delay deliveries of high-end chip-making equipment as semiconductor manufacturing company TSMC is increasingly nervous about customer demand, according to people familiar with the matter。

The world's top contract chipmaker has told its major suppliers it will delay deliveries of high-end chip-making equipment as semiconductor manufacturing company TSMC is increasingly nervous about customer demand, according to people familiar with the matter。

In addition, sources said that TSMC is working to resolve delays at its $40 billion chip plant in Arizona, and its instructions are aimed at controlling costs, a move that reflects the company's increasing caution about the demand outlook.。The source added that suppliers currently expect the delay to be short-term.。

The companies affected by the extension directive include the Dutch company ASML, which makes the lithographic equipment needed for high-end chip manufacturing, the sources said.。

ASML CEO Peter Wennink said in a media interview last week that some orders for its high-end tools had been delayed, without naming customers, and he expected it to be a "short-term management" issue.。ASML is operating at maximum capacity and expects total sales to grow 30% this year.。

Wennink told the media about the preparations for chip manufacturing: "We have received several (news) reports on the preparations for the fab.。Not only in Arizona, but also in Taiwan。"。

TSMC has been forced to delay production at the Arizona plant by a year to 2025 because it has difficulty recruiting workers and faces union resistance over its efforts to bring in workers from Taiwan.。

TSMC Chairman Andy Lau said last week there had been "tremendous" improvements at the Arizona plant in the past five months.。

The Taiwanese chip giant isn't the only company concerned that a rebound in demand may take longer than expected。

Apple, TSMC's main customer, unveiled a new series of iPhones this week that included faster chips, but it stopped short of raising prices, reflecting the global smartphone recession.。

TSMC forecast in July that sales would fall 10 percent in 2023 and operating margins would fall 4 percent in the quarter from the previous quarter, citing weak demand for smartphones and PCs and uncertainty in the AI market.。

The chipmaker also faces an increase in capital spending, which rose 21 percent to $36 billion last year, thanks to expansion plans implemented during the epidemic-driven chip boom.。

The company estimated in July that investment spending this year would be lower than previous forecasts of $32 billion to $36 billion, and said it expected growth to slow in coming years.。

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