TSMC’s dismal outlook muddies iPhone demand

By BLOOMBERG

TAIPEI • Taiwan Semiconductor Manufacturing Co (TSMC) forecast quarterly revenue sharply below projections, underscoring the deepening slowdown in both iPhone sales and the global economy.

Apple Inc’s main chipmaker foresees revenue of US$7.3 billion (RM29.98 billion) to US$7.4 billion this quarter, trailing the US$8.1 billion average of analysts’ estimates. That marks the worst growth in at least a decade. It predicted a gross margin at least 2.5 percentage points below projections.

By dint of its enormous size and reach, TSMC is seen as a bellwether for the semiconductor industry.

It trimmed the top of its forecast for capital spending by US$1 billion and has now earmarked US$10 billion to US$11 billion, about level with last year.

And the company said it has frozen all hiring till further notice, to be lifted only when macroeconomic conditions allow.

“I have just guided gross margin to decline by 3.7 percentage points,” CFO Lora Ho told an earnings briefing.

“This is primarily attributed to lower utilisation due to overall weakening macroeconomic environment and mobile product seasonality and high level of inventory in the supply chain.”

TSMC reported net income of NT$99.98 billion (RM13.16 billion) in the three months ended December, just marginally higher than a year earlier. That compares to the NT$99.06 billion average of estimates compiled by Bloomberg.