Taiwanese Semiconductor Manufacturing Company (TSMC) has issued directives to its major suppliers, instructing them to postpone the delivery of high-end chip making equipment, a news report has said.
Citing sources with knowledge of the matter, news agency Reuters said that the move by the chip manufacturer comes amidst rising apprehension regarding customer demand. However, TSMC dismissed the development as “market rumours.” The report also said that suppliers see this delay as a short-term measure.
‘Double trouble’ for TSMC
TSMC is currently building a $40 billion chip factory in Arizona that has faced substantial delays, with production now postponed until 2025 due to recruitment difficulties. It also witnessed opposition from local unions concerning the importation of labour from Taiwan. This delay has presented a dual challenge for TSMC.
TSMC concerns about the recovery of demand are not unique because Apple recently launched the iPhone, which featured a faster chip but did not come with a price increase, reflecting a global slowdown in smartphone sales, the report noted.
China’s reported ban on iPhones
Recently, reports suggested that China has instructed government employees to cease using iPhones at work even as Huawei launched its flagship phone equipped with Chinese-made chips.
TSMC, which previously manufactured chips for Huawei before ceasing supplies due to US sanctions, now faces competition from Chinese contract chipmaker SMIC.
Additionally, the company grapples with heightened capital expenditure, which surged by 21% to $36 billion last year as a result of expansion plans conceived during the pandemic-induced chip boom.
TSMC anticipates its investment spending for the year to align with the lower end of its previous estimate, ranging from $32 billion to $36 billion, with a slower rate of increase in the coming years.