TSMC announced profit decline for the first time in four years: The labor crisis has begun!

Taiwanese chip giant TSMC has announced its financial results for the second quarter of the year. The firm reported a decline in profitability for the first time in four years. Behind this decline is the decline in global smartphone and PC shipments as a result of a shaky economy, mass layoffs and cautious consumer spending.

First drop in TSMC after 4 years

TSMC posted a net profit of $5.85 billion in the second quarter, down 23 percent compared to the same period of the previous year. Revenue was also $15.68 billion, down 10 percent from the same period of the previous year. Despite the year-on-year decline, revenue and net income still exceeded market expectations. TSMC’s quarterly net income last declined in the second quarter of 2019.

As expected, TSMC attributes this decline to current macroeconomic conditions and high inflation affecting consumer demand and inventory management. TSMC also states that the demand for products such as cars and servers, which has been affected by the technology war between China and the USA, is among the factors.

Additionally, the phenomenal rise of productive AI that has made Nvidia a trillion-dollar company doesn’t seem to be helping TSMC much, even though it’s making Nvidia’s AI chips. Because TSMC expected a decrease in single digits in its sales in 2023, but this estimate was increased to 10 percent.

The labor crisis has begun

TSMC also stated that the investment expenditure of 32-36 billion dollars, which it plans to make in 2023, will be at the lower limit. On the other hand, it confirmed that the expected start of N4 production at its troubled Arizona plant in the US has been delayed to 2025 due to a shortage of skilled workers. The second factory of TSMC, which will bring the 3nm production process to the USA, is planned to start production in 2026.