Apple's M3/M3 Pro Chip Demand Decline Update
In recent developments within the supply chain, there have been indications of a downward adjustment in demand for the M3/M3 Pro chips, initially released in November of the previous year for use in MacBooks. Speculation in the market suggests that subdued consumer spending is a leading factor contributing to a delay in the anticipated AI laptop trend. This delay is presumed to be a significant factor affecting the supply chain, particularly in terms of printed circuit boards (PCBs) and wafer fabrication.
Insiders within the industry have noted that the adoption of TSMC's 3nm process for Apple's M3/M3 Pro chips may potentially impact the overall production yield for 3nm technology. Furthermore, insights from AMD's CPU supply chain point towards demand not meeting optimistic expectations, with a robust recovery appearing premature.
TSMC has officially responded, stating a non-specific commentary on individual clients. The company has indicated that detailed information regarding the first-quarter financial forecast will be disclosed during the upcoming earnings conference. Acknowledging seasonal variations, TSMC forecasts a 6.2% sequential decline in revenue for the first quarter in USD terms. However, the company maintains a positive outlook for the entire year, projecting strong growth of over 20%, with a particular emphasis on the AI and high-performance computing (HPC) sectors to offset the decline in consumer products during the initial half of the year.
Insiders reveal that the demand correction is concentrated in consumer products, specifically PCs and notebooks. This is attributed to the conclusion of the peak season for consumer spending in Europe and the United States, coupled with adjustments in MacBook inventory for older models leading to an overall decline in shipments. The outlook for laptop demand in the first half of the year remains uncertain, with analysts speculating that the downward revision for M3/M3 Pro is reasoned, considering the reduced specifications for M3 Pro and limited incentives for an upgrade.
Additionally, industry insiders highlight the relatively limited visibility of demand for AMD CPUs, potentially influenced by the upgrading effect driven by Intel CPUs. As the industry gradually recovers to pre-pandemic conditions, there exists an opportunity for the second quarter to transition into a peak season. This is especially true if industry chain inventories return to healthy levels, and restocking efforts are contingent upon terminal demand.
Industry experts estimate a consumer product boom around 2025, driven by the need for CPUs with computing power exceeding 40 TOPS in AI PCs. Chipsets meeting these specifications, such as Qualcomm's Snapdragon X Elite, AMD Ryzen 8000 series, and Intel's Lunar Lake, are expected to be gradually launched in the second half of this year, with substantial growth anticipated in the following year.
In the smartphone sector, there may be a temporary slowdown in the momentum of brand factories' shipments before the Chinese New Year. However, guidance from major IC industry players suggests that the quarter-on-quarter decline is mostly in single digits, surpassing previous seasonal levels.
The prevailing trend of increasing silicon content in AI is poised to shape the industry. For TSMC, the year 2024 is anticipated to be characterized by healthy growth, driven by contributions from HPC, N5/N3 processes, and CoWoS revenue. Growth in platforms such as smartphones, IoT, and consumer electronics is expected to be below the company's average.
