As demand slows, TSMC asks suppliers to postpone equipment delivery

As demand slows, TSMC asks suppliers to postpone equipment delivery

What I saw on Wall Street

TSMC has asked major suppliers to delay the delivery of high-end chip manufacturing equipment due to economic conditions and weak end-market demand, including companies such as ASML, which makes lithography equipment. On Friday, TSMC's American shares fell 2.4% to a four-month low.

On Friday, Sept. 15, China TSMC asked major suppliers to delay delivery of high-end chip manufacturing equipment due to economic conditions and weak end-market demand, including companies such as ASML, which makes lithography equipment, according to people familiar with the matter.

TSMC's suppliers now expect delivery delays to be short-term.

In July, TSMC postponed the start date of chip production at its Arizona plant to 2025.

TSMC's US shares fell 2.4 per cent to a four-month low on Friday as TSMC asked suppliers to delay equipment delivery. Chip equipment shares ASML and applied materials fell 4 per cent, while KLA and Ram research fell 5 per cent. The Philadelphia semiconductor index fell 3%, losing 3500 points to a four-week low. Intel fell 2 per cent to a week-and-a-half low, hitting its highest level since July last year on Tuesday; AMD fell nearly 5 per cent to a four-month low and Nvidia fell 3.7 per cent to a four-week low.

Equipment makers such as Applied Materials have said that "this year's leading weaknesses are offset by mature logical strengths," Citigroup analyst Atif Malik wrote in a research note.

Earlier this year, TSMC announced that the 4nm mass production schedule of the Arizona plant in the United States would be postponed to 2025. Semiconductor industry experts said that this shows the actual situation that it is difficult to build a factory in the United States and confirms what TSMC founder Zhang Zhongmou said. The United States is not only short of talent, but also expensive to promote semiconductor manufacturing on the ground.

The Arizona plant in the United States has been under construction since April 2021, and the first phase of the fab has entered a critical stage of processing and installing the most advanced and precision equipment. However, there are not enough professionals who can install the equipment skillfully in semiconductor facilities. Experienced professionals must be deployed to train local technical staff, affecting the 4nm delay in mass production.

Zhang Zhongmou has said many times that there is a shortage of semiconductor manufacturing manpower in the United States, and the cost of setting up a factory and manufacturing is expensive. Take TSMC's past experience as an example, the cost of the same product is 50% higher than that of a factory in Taiwan, China, and it is difficult to compete with the world.

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