TSMC Can't Escape Demand Shock, Wall Street's Leading Firms Say Bad Outlook

Wall Street has turned bearish on TSMC , warning that the world's largest chipmaker will issue conservative guidance on its revenue outlook due to weak demand. TSMC will report its last-quarter earnings on Jan. 12, when it is also expected to announce its outlook for the year. Goldman Sachs and UBS both expect TSMC's sales to be flat in 2023, with UBS lowering its price target on the company by 7.4%.

UBS analysts led by Sunny Lin wrote in a report: "By 2023, TSMC will not be immune to the impact of industry inventory digestion and end demand adjustment. Considering weak consumer demand and slowing growth of high-performance computing , we lowered TSMC’s 2023 revenue forecast to flat from 3% growth.”

As a supplier of major companies such as Apple $Apple (AAPL.US)$ and Nvidia $NVIDIA (NVDA.US)$ , TSMC is regarded as a barometer of global electronics demand. The company's shares are down 34% from their peak in January last year as consumer spending on big-ticket items such as smartphones, laptops and servers plummeted after major central banks raised interest rates to combat rising inflation , while much of the world grapples with a potential recession. The market value of Apple, TSMC's main customer, has fallen below $2 trillion amid concerns over demand.

According to the consensus forecast of analysts compiled by the media, TSMC's $Taiwan Semiconductor (TSM.US)$ sales may grow by 43% in 2022, and this year's growth rate is expected to slow down to 6.3%. Goldman Sachs analysts Bruce Lu and Evelyn Yu said in a note that while a healthy recovery is expected in the second half of the year, "demand rebound may be slower than companies expect as clear signs of end-demand recovery are still lacking."