It is expected that TSMC's overall capacity utilization rate from 45nm to 3nm will drop to 75%

According to Taiwan media DIGITIMES Research, it is expected that TSMC's overall capacity utilization rate from 45nm to 3nm will drop to about 75% in the first half of 2023, and TSMC's revenue will start to decline from December, and will decline more significantly in Q1 next year.

Insiders in the semiconductor equipment industry pointed out that the capacity utilization rate of second-tier wafer foundries has begun to decline since the third quarter. From the fourth quarter onwards, TSMC expects that the decline will significantly expand in the first half of 2023. The impact on revenue and profits needs to be comprehensively considered the impact of the exchange rate and the 6% foundry price increase. The current market estimates TSMC in the first quarter of next year. Revenue fell at least 10% month-on-month, and even more pessimistically, it may exceed 15%.

Major manufacturers generally hold a conservative attitude towards the prospects of the mobile phone and PC markets, and tighten up shipments by reducing OEM orders. According to sources, in response to the continued sluggish demand in the terminal market and the slowdown in inventory clearance, major customers such as Apple, AMD, Nvidia, Qualcomm and MediaTek, as well as small and medium customers, are continuing to reduce TSMC's orders. Both MediaTek and Qualcomm have previously warned that the demand for mobile phone APs will be lower than expected, and AMD and Nvidia are also conservative about the PC market outlook.

Overall, sources estimate that TSMC's overall capacity utilization rate for its 45nm to 3nm process will drop to 75% in the first half of 2023 after falling from 100% in the third quarter to 95% in the fourth quarter. TSMC President Wei Zhejia also said that the inventory adjustment of the semiconductor supply chain will continue until the first half of 2023, and the capacity utilization rate of TSMC's advanced and mature process nodes will not rebound until the second half of the year.

Wei Zhejia once pointed out that due to the sharp shrinkage of chip demand for mobile phones and PCs, the capacity utilization rate of the 7/6nm process will be lower than that of other nodes. The industry predicts that TSMC's 7nm process capacity utilization rate may drop from 95% in Q3 to below 50% in Q1 next year, and TSMC's Fab 18's 5nm capacity is expected to drop from full load to 70-80% in the first half of next year. In addition, Intel's 3nm fab capacity utilization will be much lower than expected due to delays in Intel's orders, the source said, adding that some EUV lithography machines are reportedly idled due to production cuts.

The source added that TSMC's revenue, while still hitting a record high in November, is estimated to start declining from December and drop more sharply in the first quarter of next year. Still, TSMC is expected to maintain its annual revenue and profit growth momentum in 2023, the sources stressed. Thanks to Apple's equipment shipments entering the peak season and major customers bringing strong replenishment orders, TSMC's 3nm and 5nm capacity utilization rates will increase.