TSMC Faces Turnover Decline Amid Weaker Economic Conditions

Taiwan Semiconductor Manufacturing Company (TSMC), a leading global chip manufacturer, recently reported a slight decrease in its Q1 turnover to €15.9 billion, attributing the decline to weaker economic conditions. As the demand for smartphone and server chips dwindles, the company continues to explore the possibility of establishing a European factory.

TSMC, a critical player in the chip industry, is responsible for a significant portion of advanced chip production. Major companies such as Apple rely on TSMC for manufacturing their powerful chips. Despite the decline in turnover, the demand for automotive chips has remained stable. However, the company’s financial chief anticipates a lower turnover this quarter compared to the same period last year.

Rising energy costs are another challenge faced by TSMC, with a 17% increase reported this month. Nevertheless, the company continues to invest in the construction of new factories, allocating tens of billions of dollars for expansion this year.

TSMC’s Global Expansion Plans

TSMC’s expansion goes beyond Taiwan, with factories being built in other parts of the world. In late 2021, the company announced a $40 billion investment in constructing facilities in Arizona. This move was welcomed by the Biden administration, which is eager to boost domestic chip production.

However, disagreements over terms persist, as reported by The Wall Street Journal. According to insiders, TSMC is concerned about sharing profits with the government and disclosing detailed information about its business operations. Simultaneously, the company hopes to receive up to $15 billion in aid.

Potential European Factory Investment

The European Commission is also eager to attract TSMC to Europe under the European Chips Act. Recently, the European Parliament and the European Council reached an agreement regarding this initiative. TSMC CEO, C.C. Wei, revealed that the company is in discussions with customers, considering a factory targeting the European automotive industry.

Although the progress of these plans remains unclear, TSMC is likely to seek billions of euros in government support. Establishing a European factory could significantly strengthen the company’s global presence, potentially leading to increased revenue generation in the long run.

Conclusion

As TSMC faces a turnover decline in Q1 and weaker economic conditions, the company continues to pursue global expansion. The possibility of a European factory investment, targeting the automotive industry, presents new opportunities for growth. However, the chipmaker must navigate the challenges of rising energy costs and the negotiation of favorable terms with governments. With billions of dollars being invested in new factories, TSMC’s future moves will be closely watched by the industry and investors alike.