The reduction in capital costs of TSMC has been greatly facilitated by the decline in demand for 7th products

The reduction in capital costs of TSMC has been greatly facilitated by the decline in demand for 7th

At yesterday ' s quarterly report conference, TSMC management had to admit that the capital expenditure for the current year would have to be reduced by 10 per cent in relative January, and in monetary terms, the decline would be $4 billion. Together with the analysts invited to the event, the company ' s executives explained that this trend was mainly due to a decline in demand for 7-Nm products.

It will be recalled that in the second quarter of the 7th century, the products generated 30% of TSMC revenues, but in the third quarter the share fell to 26%. Even under these conditions, the company was able to increase the revenue by 14.8%, but should be grateful for the increase in demand for 5-Nm products, which increased its share of TSMC ' s total revenue from 21% to 28%. According to the company ' s representatives, the decline in demand was the largest in the consumer market, the smartphone and PC segments. Since many components for this type of device are produced in 7-Nm technology, the demand for TSMC ' s 7-N ' s output services fell sharply in the third quarter. Some of the companies ' clients decided to delay the release of new 7-N ' s products, which were expected to be released in the fourth quarter of the year. Some until mid-2023, the loading of TSMC equipment producing products under the N6 and N7 lithographic standards will remain lower than in the previous quarter.

The company was forced to reduce the cost of further expanding the production of 7-Nm products, but believes that the measures will be temporary, and in the second half of next year the demand for output services using the N6 and N7 lithographic standards will return to growth. As the Director General of TSMC C.C. Wei explained, in the long run, the company's strategy will create a "new wave" of demand for 6-Nm and 7-Nm products among customers, loading the corresponding equipment in an optimal manner. In general, the 7-n process for the company should remain important and long-term. In the current situation, the demand for 5-Nm and 28-Nm TSMC products remains high, so the 7-Nm process is merely a sequence of circumstances that will have a temporary impact on the company's operations, according to management.

The financial director of TSMC, Wendell Huang, explained that of the $4 billion that the company had to save this year for capital costs, approximately half of the amount was due to delays in the delivery of lithographic equipment, and the other half was due to the decline in demand for 7-N products, which would be spent on the purchase of equipment in 2023 and would simply be taken into account in the relevant period.