TSMC slashes revenue guidance due to iPhone, global smartphone market slowdown

Apple chip partner TSMC has issued a warning on its financial situation, advising of reduced revenue growth and plans to cut its investments as the company combats the global smartphone market slowdown that has affected many other device producers.

For the first quarter, Taiwan Semiconductor Manufacturing Co. anticipates revenue of between $7.3 billion and $7.4 billion. The prediction resembles a revenue decline of 14 percent year-on-year, and would be the largest decline for the company since 2009, a time when revenue dropped 54 percent.

For full-year revenue, TSMC believes growth has stalled, reducing down from the 6.5 percent in 2018 to between 1 percent and 3 percent for 2019, Reuters reports.

The company claims the anticipated lower financial results are caused through a sudden drop in sales for the high-end market, which has caused an inventory build-up. The problem is likely to stay with the company for a while, as it anticipates weak demand until the next batch of smartphone launches in the second half of the year.

TSMC is a major player in the iPhone supply chain, and is the producer of Apple's A-series processors used in iPhones, iPads, and other devices. While TSMC does not specify any particular client names, it is likely that Apple played some part in its fortunes.

On January 2, Apple CEO Tim Cook provided revised revenue guidance for the December quarter, with the company anticipating $84 billion in revenue, down from its original forecast of between $89 billion and $93 billion. A reduced number of iPhone upgrades was cited as one of the reasons for the reduced revenue warning, with results in Greater China suggested as being underwhelming compared to expectations.

TSMC's revenue advice is a reversal of the good news it offered for November, where it advised it had year-on-year revenue growth of 5.6 percent.

3 Comments

magman1979 1301 comments · 11 Years

About 5 years ago

And I bet you anything the mainstream media narrative won't even bother to mention this is also due to a GLOBAL decline in the overall smartphone industry, they will strictly focus on this being because of APPLE exclusively!

volcan 1799 comments · 10 Years

About 5 years ago

magman1979 said:

And I bet you anything the mainstream media narrative won't even bother to mention this is also due to a GLOBAL decline in the overall smartphone industry, they will strictly focus on this being because of APPLE exclusively!

Well TSMC's largest customer is Apple. They do make a few low end cell phone SOC as well, like the ones used in brands you've never heard of, which are mostly sold in Africa, Latin America, India and China, which by the way, are the global regions that still have a rapidly growing cell phone market, just not so much in smartphones, and therefore not much of a market for Apple. Samsung also sells a lot of super cheap phones in those markets. Consumers in developing nations are very cost sensitive. The flagship luxury smartphone models are starting to reach saturation in the developed world.

k2kw 2079 comments · 11 Years

About 5 years ago

magman1979 said:

And I bet you anything the mainstream media narrative won't even bother to mention this is also due to a GLOBAL decline in the overall smartphone industry, they will strictly focus on this being because of APPLE exclusively!

Apple is going to get the heat in the Media because
1. The global contraction began over a year ago so that angle isn't new and won't really show up in the financial Media.
2. Apple is the only major American phone manufacturer , why would you expect CNBC to report on the financial performance of foreign companies like Lenovo, Hauwau, Sony, and Samsung beyond their comparison to Apple which was recently the most valuable company in the World.
3. Apple is going to be compared to Microsoft, Amazon, Google, and Facebook as other big tech companies. If they do better this quarter Apple is going to get heat.

Cook better put on his big boy pants. He probably has over a year to turn things around by the 2020 Annual Shareholder meeting. So Year Over year growth beginning 2020Q1 will probably help.