TSMC To Post Revenue Growth In 2023 Via Price Increases & 3-nanometer Tech Says Analyst

Ramish Zafar
A 300mm TSMC chip wafer on display at the 2020 World Semiconductor Conference in Nanjing, China. Image: Getty Images via Los Angeles Times

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The Taiwan Semiconductor Manufacturing Company (TSMC) is slated to grow its revenue by up to 9% next year despite an ongoing correction in the semiconductor industry that forced the company to slash its capital expenditure for this year. TSMC, which has seen strong growth over the past couple of years, aided by the booming demand for computing products and its leading technologies, became the latest semiconductor firm to succumb to a slowing personal computing market as it races to churn out even more advanced 3-nanometer chips.

The latest growth estimates for the firm come courtesy of the research firm Trend Force, which held a forum earlier today in Taiwan to discuss the state of the semiconductor industry.

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The key takeaway from TSMC's latest earnings report was that the company expects the onogiig correction in the semiconductor industry to get worse before it gets better. TSMC chief Dr. C.C. Wei explained that his company was caught unaware by the scale of the demand drops in personal computing this year, as the demand forecasts provided to him by customers did not foresee the drops even by the start of this year.

Now that the industry is reeling from a slash in purchasing power, Dr. Wei shared that the correction will peak in the first quarter of next year before it normalizes. He also maintained that TSMC will still grow in 2023 due to its scale and the strong interest in leading edge semiconductor manufacturing technologies such as 3-nanomter.

While the executive refrained from providing a growth estimate, Trend Force's analyst Qiao An was more forthcoming at her firm's forum in Taiwan today. At the event , the analyst explained that the wafer industry as a whole will continue to grow this year, at a high rate of 28% due to capacity and price increases.

TSMC's third quarter of 2022 earnings report revealed that while revenue contribution from older technologies fell, its latest 5-nanometer products managed to grow. Image: TSMC

TSMC's latest earnings report saw the firm's 5-nanometer process technology grow its contribution as the share of older technologies fell in its revenue pie due to the slowing demand in personal computing. The latest technology is not used by any PC firm as of the third quarter, while the 5-nanometer products are used in smartphones.

The TrendForce analyst explained that the global foundry industry will grow at only 2.7% next year, and this growth will primarily be fuelled by TSMC's strong operations. She outlined that the world's largest ontrct chip manufacturer will grow its revenue between 7% and 9% next year, due to the introduction of the 3-nanomter process and price increases.

TSMC's price increases for 2023 have been rumored before as well, with the latest stating that the fab might increase its prices between 3% and 6% next year. At the earings call, Dr. Wei also explained that the demand for his company's 3-nanomter process is high, and TSMC is currently facing a shortage of tools with which to manfuactre the new technologies.

The Taiwanese fab will start volume production of the 3-nanomter semiconductors this quarter, with executives continuing to maintain that production meeting pre-set timelines. TSMC, which is leading the global contract chip manufacturing industry is also facing stiff competition, with its primary rival, the Korean chaebol Samsung's foundry division Samsung Foundry also eager to catch up with it for both 3-nanometer and 2-nanomter manufacturing. 2-nanomter is believed to be at the very end of chipmaking advances, and both Samsung and TSMC plan to enter mass production in 2025.

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