TSMC's Chip Deliveries Delayed Due to Slowing Demand

Taiwan Semiconductor Manufacturing (TSMC), the world's largest third-party semiconductor manufacturer, has instructed suppliers to postpone some deliveries amidst concerns about a slowdown in chip demand, as reported on Friday.

Stock Market Reaction

Following the report, TSMC stock (ticker: TSM) experienced a decline of 1.1% to reach $90.47 during Friday morning trading. Additionally, shares of major chip-equipment manufacturers, including Applied Materials (AMAT), KLA Corp. (KLAC), and ASML Holding (ASM), dropped by more than 3%.

TSMC's Response

TSMC has not yet provided an official comment in response to these reports. However, last week, the company revealed that its August revenue declined by 13.5% compared to the previous year, but increased by 6.2% from the previous month.

Increasing Nervousness

According to Reuters' sources familiar with the matter, TSMC has communicated its concerns about customer demand to large chip-equipment suppliers, requesting them to delay certain deliveries. As demand from customers becomes an increasingly worrisome factor, the company is taking this step as a precautionary measure.

TSMC's Market Dominance

TSMC is a dominant player in the high-end chip market, manufacturing the main processors for Apple iPhones, Qualcomm mobile chipsets, and processors produced by Advanced Micro Devices (AMD). With approximately 60% market share in the third-party chip-manufacturing industry, TSMC maintains its leading position. Samsung follows closely behind with a 12% market share, according to TrendForce.

Revised Financial Guidance

In July, TSMC adjusted its financial guidance for the year, anticipating a 10% decline in revenue compared to the previous year. Management cited a worse-than-expected decline in demand outside of the artificial intelligence chip market and a weaker recovery than initially anticipated in China.