TSMC sees zero growth in global chip industry

Taiwan Semiconductor Manufacturing Company (TSMC) has slashed its 2015 growth forecast for the global chip industry to zero, DigiTimes reported. The company attributed the dismal performance to the sluggish smartphone market in China as well as the struggling global economy, which directly resulted in excess inventory that started since the beginning of 2015.

"Due to a weaker global economy, a stronger U.S. dollar environment and a volatile financial market, the electronic device market has been negatively impacted, resulting in a lack of growth," Bloomberg quoted TSMC co-CEO Mark Liu as saying.

According to IDC, China remains a major global smartphone market in 2015, although the results haven't been as positive as in previous years. As the largest market for smartphones, China consumed 32.3 per cent of all new smartphone shipments in 2014. Its importance remains great even if its growth has begun to slow.

Shipments are forecast to grow just 1.2 per cent YoY in 2015, which is down from 19.7 per cent in 2014. China will remain the largest market for smartphone volumes throughout the forecast period. However, its share of the overall market is expected to drop to 23.1 per cent in 2019 as high-growth markets such as India continue to gain more market share.

China will remain the largest market for smartphone volumes throughout the forecast period, but its share of the overall market is expected to drop to 23.1 per cent in 2019.

The latest news from TSMC may come as a surprise since just last month, the company was still expecting "full-year revenue growth rate" to be close to double digits. TSMC revealed that the outlook for the rest of this year is worse than the company previously expected because customers are digesting an inventory upsurge that built up earlier this year.

In July, TSMC cut its outlook for the 2015 global semiconductor growth to three per cent from the April estimate of four per cent. For the foundry sector, TSMC previously dropped its growth forecast from to six per cent from the previous 10 per cent.

Likewise, the company has adjusted downward its capex target for 2015 to more than 20 per cent, which is now at $8 billion from $10.5-11 billion. TSMC added that capex for next year will be higher than 2015 levels. TSMC's 2015 capex could be the lowest since 2012 when it spent $8.32 billion. Nonetheless, the company expects revenues to drop four to five per cent in Q4.

- Lester Belen