TSMC forecast sharp revenue drop as global slowdown eats away at smartphone and technology firms

(qlmbusinessnews.com via telegraph.co.uk – – Thu, 17th Jan, 2019) London, Uk – –

Semiconductor market bellwether Taiwan Semiconductor Manufacturing Company (TSMC)has forecast a sharp drop in sales growth as a global slowdown eats away at smartphone companies and technology firms.

Taiwan-based TSMC, which makes chips that are used in Apple's iPhones and iPads, said it expected revenues to fall to around $7.3bn (£5.7bn) in the current quarter, below the $8.1bn predicted by analysts, and a significant drop on its previous quarter.

Earlier this month, Apple warned that its revenues, which are largely driven by sales of the iPhone, were due to miss expectations.

With the global smartphone market slowing down as sales reach saturation point, chipmakers are expecting orders to slip.

TSMC endured its worst quarter in a decade in the three months ending in December as its market cap fell by $39bn.

The amount of revenue it is expecting would be significantly down on the $9.4bn the chipmaker made in the final three months of 2018.

TSMC is the world's largest dedicated semiconductor foundry, supplying customers including Qualcomm, Nvidia and AMD. It also manufactures dedicated chip designs exclusively for Apple's iPhones, such as the A12 Bionic chip which appears in the iPhone XS and iPhone XR smartphones. 

TSMC chief financial officer Lora Ho said the fall was down to weakening macroeconomic environment, “mobile product seasonality” and an overstocked supply chain.

Earlier this month, Apple chief executive Tim Cook warned shareholders that its sales were set to fall to around $84bn, down from a previous estimate of $93bn.

Meanwhile, South Korea's Samsung, which manufacturers the Samsung Galaxy S9 smartphone, also predicted its first quarterly earnings drop in two years last week as chip and phones sales stall.

By  Matthew Field