Why TSMC’s Huge Revenue Seems to Worry the Semiconductor Supply Chain?

Published  July 21, 2022   0
S Staff

The  challenge is to get the top-notch semiconductor manufacturing equipment because of the severe supply chain imbalances

The globe’s biggest semiconductor manufacturer TSMC recorded another huge profits in the quarter along with augmented sales, and hefty margins. According to its earnings report of July 14, experts opined that this huge margin and profit will last all through this year. It is very good news for the investors for the fact the stock prices might increase more, but the profit numbers might cause trouble for a wider economy. The fiscal report of the company is a clear indication that semiconductor shortage and its inflation will be carried out for a few more months.

CEO C.C. Wei told investors, "our demand continues to exceed our ability to supply. We expect our capacity to remain tight throughout 2022." TSMC is the backbone of several international electronic firms and in fact, it controls most of the globe’s semiconductor production. So, if the CEO states that his company’s capacity will be reduced or fatigued then the entire semiconductor market will be strained. According to the CEO, another challenge is to get the top-notch semiconductor manufacturing equipment because of the severe supply chain imbalances. This in turn extended the plans of the TSMC to expand its manufacturing unit. Several assembly units which were about to begin its operation this year will have to wait until the first half of 2025.

Source: Counterpoint Research

There were also reports that the chip market is growing. For instance, TSMC grabbed a profit of $8.1 billion for the quarter finished on June 30. This is two and a half times more than what TSMC was making during the pandemic in 2020 and 2021. TSMC’s profits are growing due to that fact that its demand for chips is always increasing from its customers. Ever since the Q1 2020, TSMC grabbed the highest YoY revenue growth and it managed to sell $18.2 billion worth of chips last quarter, which is two times more than the pandemic period.

In one part of the chip market that is the consumer electronics where the supply has outstripped demand. The CEO opined that the huge demand from computer maker, smartphone manufacturers and other consumer electronics firms is reducing owing to the escalating inflation and worries of recessions. The CEO speculated that until the end of 2023 it will be difficult to sell off all the chips as they have produced beyond requirement.