AI Alone Can’t Save the Chip Industry From a Downturn
Nvidia may be able to sell every artificial-intelligence chip it can make. Unfortunately for the chipmaking industry, there is only one Nvidia. That conundrum is already apparent at the start of the second-quarter earnings season.
Taiwan Semiconductor Manufacturing, the chipmaking company more commonly known as TSMC, said Thursday that second-quarter revenue fell nearly 10% from the same period last year. That marks the company’s first revenue decline in 16 quarters—the longest streak of growth since at least 2000, which is as far back as such data compiled by S&P Global Market Intelligence goes. It wasn’t a total surprise.
Analysts had been expecting a decline, as the chip industry is still mired in a slowdown because of slumping demand for products like personal computers and smartphones. Global chip sales for 2023 through the month of May were down 21% from the same period last year, according to data from the Semiconductor Industry Association. And a turnaround doesn’t seem to be on the near-term horizon.
TSMC said it now expects its full-year 2023 revenue to decline around 10% from last year on a U.S. dollar basis, compared with the low- to mid-single-digit decline the company projected just three months ago. TSMC is now the world’s largest semiconductor company by annual revenue.
And it is a contract manufacturer that produces chips designed in-house by high-tech titans such as Apple, Amazon, Microsoft and Alphabet’s Google along with other major chip designers such as Nvidia and Advanced Micro Devices, which lack their own manufacturing capabilities. Hence, the company’s results serve as a strong bellwether for the health of the entire sector—and the latest set cast a large shadow. The PHLX Semiconductor Index
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