Electronics

TSMC, the world's largest foundry manufacturer, held a talk today and is optimistic that revenue in the fourth quarter is expected to continue to grow; President Wei Zhejia said that TSMC's annual dollar revenue will grow by 24%.

Bloomberg information columnist Tim Culpan wrote today that global semiconductor orders continue to flow in, but TSMC’s latest data reveals that such strong demand is beginning to look like the industry is hoarding goods. When the bottleneck of the supply chain is relieved, this situation may become a big problem.

TSMC today announced record-breaking profits, thanks to orders from major customers such as Apple, Nvidia and AMD. This optimistic atmosphere will continue into the foreseeable future. TSMC estimates that the dollar revenue will grow 24% for the full year.

Gao Canming pointed out in the column that, however, the huge amount of these orders is not to meet the global demand for electronic devices, car connectivity, and thriving server farms. Before the end of September, TSMC’s inventory jumped 66% from last year, exceeding 65% for the fourth consecutive quarter.

And another inventory indicator: inventory days maintained at a high of 85 days. Wei Zhejia, president of TSMC, told investors that he still expects customers and other companies in the supply chain to continue to stock up inventory before the end of the year and maintain high inventory levels for a longer period of time. This means that TSMC is not the only company hoarding stocks, and other companies are also hoarding chip inventories as quickly as possible.

Gao Canming pointed out that this phenomenon is worrying. More than 50% of TSMC's revenue comes from two most advanced process technology nodes. Generally speaking, the more advanced the manufacturing process, the shorter the shelf life: customers require that the latest and greatest chips must be continuously upgraded.

However, the bottleneck of the global supply chain forces customers to place larger orders than usual, avoiding the management of the business trip pool, resulting in the new supply not being able to reach the destination smoothly.

Gao Canming pointed out in the article that products in many industries can be stockpiled without too much risk, such as coal, grains, and even older electronic parts. But in the cutting-edge chip industry, inventory can only be kept for half a year. Customers know this very well.

If customers start to see a reduction in terminal demand, they are likely to cut orders significantly to digest the stockpiled inventory.

Although the world continues to face a shortage of chips, now is the time to examine and clear undigested orders, because greed and thirst may soon be reduced to indigestion.