How TSMC is holding its own despite weak chip demand

How TSMC is holding its own despite weak chip demand،

You might think that the world's top foundry, Taiwanese foundry TSMC, is financially hit by a sluggish chip industry that has seen demand for wafers decline. For example, TSMC reported that it shipped 2.96 billion 12-inch wafers during the fourth quarter of 2023. This represents a 20.1% decrease compared to the company's shipments of 3.7 billion 12-inch wafers. last year. Despite this sharp decline, TSMC's revenue in Q4 2023 was $19.62 billion, down just 1.5% from the $19.93 billion reported in the same quarter in 2022. .

So how did TSMC manage to control its revenue decline? It raised the price of its 12-inch wafers by 22% in the fourth quarter year-over-year to an average price of $6,611, up from $5,384 in the fourth quarter of 2022. Some analysts attribute the increase to the start of production of 3nm as TSMC's largest customer. , like Apple, received the 3nm chips they ordered. While Apple reportedly got a special deal from TSMC last year, the price of a silicon wafer used for the latest cutting-edge 3nm node is reportedly estimated at $20,000 per wafer.

15% of TSMC's Q4 revenue came from 3nm chips

Of course, the further you go from the last peak process node, the lower the wafer price. 15% of TSMC's Q4 revenue came from its L3 (3nm process node). TSMC made $2.943 billion from 3nm, N5 (5nm) made $6.867 billion, and N7 (7nm) made $3.3354 billion. TSMC's advanced technology nodes (N3/N5/N7) accounted for 67% of TSMC's total wafer revenue in Q4 2023.

TSMC Wafer Prices Trending High - How TSMC Holds Up Despite Low Chip Demand

TSMC wafer prices tend to increase

By Tom's material, Stacy Rasgon, principal analyst of US Semiconductors and Semiconductor Capital Equipment at Bernstein Research, notes that while the total number of chips shipped from 2019 to 2023 has decreased, the average selling price (ASP) has increased sharply. In a tweet, Rasgon wrote: “To what extent have prices contributed to the growth of the semiconductor industry in recent years? Would you be surprised to learn that the answer is “More than all that?” » »

Eventually, chip demand will begin to recover, and in combination with rising wafer prices, TSMC should begin reporting strong quarterly numbers.