Apple, AMD and Nvidia scale back chip orders, TSMC's 2022 revenues could take a hit
Only a few months ago, TSMC seemed confident that its 2022 revenues could break previous records, but the situation looks quite different now as we step into the third quarter. Sources close to DigiTimes report that TSMC’s top clients including Apple, AMD and Nvidia need to scale back orders, so the Taiwanese foundries may be forced to revise the revenue growth projections.
DigiTImes sources note that TSMC CEO CC Wei previously estimated that the company was on track to meet or even beat its sales outlook of 25-29% growth for 2022. This will most likely change with the scaled back orders from Q3 and Q4, but the foundry still expects Q2 revenues to hit record highs between US$17.6 and US$18.2 billion, which translates to a 1.9% YoY increase mid-year.
While the pandemic effects are waning, the world is facing other challenges now with the rapid rise of inflation and growing uncertainties brought on by the war in Ukraine. This situation is causing a sale slowdown in the electronic consumer market, and the most affected sectors appear to be TVs, mobile phones and PCs.
As one of the leading smartphone makers, Apple has recently placed its initial SoC orders for the upcoming iPhone 14 models, slated for launch in September this year. DigiTimes sources indicate that the orders are about 10% smaller than what was initially agreed upon with TSMC.
A slowdown in PC processor sales is also prompting AMD to cut back wafer orders for TSMC's 7nm and 6nm process manufacturing for the fourth quarter of 2022 and first-quarter 2023 by about 20,000 wafers. Apparently, the downscale is not affecting the 5 nm orders for the upcoming Zen 4 processors.
Nvidia is also forced to cut back orders, as the supply chains are eliminating all bottlenecks and large stocks of RTX 3000-series build up quickly. At the same time, the demand for GPUs is sharply decreasing due to a bearish crypto market, yet Nvidia is not keen on lowering prices too much to clear the stocks and the launch of the RTX 4000 series could be affected.
DigiTimes sources inform that Nvidia is trying to cut orders for the next gen 5 nm RTX 4000 series, but TSMC is unwilling to make any price concession. Instead, the Taiwanese foundry would allow shipment delays up until Q1 2023 if Nvidia can find replacement customers for vacated production capacity. This may turn out to be very difficult since Nvidia is actually employing the intermediary N4 nodes for the RTX 4000 GPUs rather than the more streamlined N5 nodes used by AMD.