Written by Sam Nosy, Fanny Botkin and Toby Sterling
TOKYO/SINGAPORE/AMSTERDAM (Reuters) – Taiwan’s TSMC has requested its main suppliers to delay deliveries of superior chipmaking tools, because the world’s largest contract chipmaker grows involved about buyer demand, two sources conversant in the matter mentioned.
Shares of TSMC suppliers together with Netherlands-based ASML fell after the Reuters report.
The orders for TSMC, which has been stricken by delays at its $40 billion chip manufacturing facility in Arizona, are geared toward controlling prices and replicate the corporate’s rising warning in regards to the demand outlook, the sources mentioned.
The sources mentioned that the suppliers presently anticipate the delay to be short-term, and requested anonymity as a result of the knowledge just isn’t public.
TSMC mentioned it doesn’t touch upon what it known as “market rumours.”
The corporate referred Reuters to CEO CC Wei’s feedback in July that weak financial situations, a gradual restoration in China and weak end-market demand are making clients extra cautious and extra acutely aware of stock management.
Corporations affected by the postponement directions embody ASML, which makes lithography tools important to high-end chipmaking, one of many sources mentioned.
In an interview with Reuters final week, Peter Wennink, ASML’s chief government, mentioned some orders for its cutting-edge instruments had been delayed, with out saying by whom, and that he anticipated it to be a “short-term administration” situation.
ASML, Europe’s most respected expertise listed firm, is working at most capability and general gross sales are anticipated to develop by 30% this 12 months.
“We now have acquired a number of (information) stories about manufacturing readiness. Not solely in Arizona… but additionally in Taiwan,” Wennink advised Reuters, referring to preparations for manufacturing chips.
ASML shares fell 2.5%, making the corporate the most important loser on the euro zone STOXXE50 index.
ASM Worldwide, a smaller tools firm that can be a provider to TSMC, fell 5.6%, with BE Semiconductor, a packaging tools firm, down 3.3%.
Shares of main US semiconductor corporations Utilized Supplies, KLA Corp and Lam Analysis fell between 2.2% and a couple of.6% in pre-market buying and selling.
Analyst Michael Rogge of Degroof Petercam mentioned he was not stunned by the promoting.
“There was a variety of pleasure round AI and its implications for the semiconductor business,” he mentioned, including that AI has been optimistic for TSMC, which makes chips for NVIDIA.
“Nonetheless, the energy of demand for AI chips just isn’t sturdy sufficient to offset what is occurring in different sectors.”
He cited cell telephones, laptops, industrial chips and extra lately automobiles as drawback areas. “That is a variety of finish markets which might be slowing down,” he mentioned.
Double hit
TSMC was compelled to postpone manufacturing on the Arizona plant by a 12 months till 2025, because it struggled to rent employees and confronted opposition from unions over efforts to usher in employees from Taiwan.
“In the event you ship lots of people from Taiwan to assist construct a manufacturing facility in Arizona, they do not work elsewhere. So it is form of a double whammy,” Wennink mentioned.
TSMC President Mark Liu mentioned final week that there was “large” enchancment on the Arizona web site prior to now 5 months.
The Taiwanese chip large is not the one one involved {that a} restoration in demand might take longer than anticipated.
Apple, a significant TSMC buyer, launched a brand new sequence of iPhones this week that embody a quicker chip, however didn’t increase costs, reflecting a worldwide smartphone decline.
Beijing has ordered some authorities staff to cease utilizing iPhones at work, media stories mentioned, and one supply mentioned tech firm Huawei’s launch of a flagship telephone utilizing Chinese language-made chips is inflicting additional concern at TSMC.
TSMC used to fabricate chips for Huawei however halted provides after Washington imposed sanctions on the Chinese language firm. Analysts discovered that Huawei labored with Chinese language chipmaker Semiconductor Manufacturing Worldwide Corp (SMIC) to fabricate a complicated chip for its newest smartphones.
TSMC in July forecast a ten% decline in 2023 gross sales and as much as a 4% decline in working margin this quarter in comparison with the earlier quarter, citing weak demand for smartphones and private computer systems and uncertainty in regards to the synthetic intelligence market.
The chipmaker can be dealing with excessive capital expenditures, which elevated 21% to $36 billion final 12 months, from enlargement plans put in place throughout the pandemic-triggered chip growth.
It estimated in July that this 12 months’s funding spending can be on the low finish of a earlier forecast of $32 billion to $36 billion, and mentioned it anticipated a slower enhance within the subsequent few years.
(Extra reporting by Sam Nosi in Tokyo, Fanny Botkin in Singapore and Toby Sterling in Amsterdam; Enhancing by Myung Kim and Stephen Coates)
