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TSMC, the sole iPhone Chip Supplier Cautions a 22% Sequential Decline in Revenue
February 18, 2019

TSMC is the world’s largest semiconductor foundry and has been highly dependent on the smartphone growth, specifically the iPhone. While the impact of Apple’sless than expected iPhone sales have been well documented, there are those that try to put on a positive face toward the issue and the additional caveat of a slower world economy.  Digitimes ran the headline, “TSMC to remain sole iPhone chip supplier”, a positive sounding spin on what was actually a far less optimistic scenario issued by the company itself a few days before the recent holiday.  While TSMCdid not specifically mention Apple by name, in their 4Q call, they did caution that 1Q would see a 22% sequential decline in revenue and that 2Q would also see declines, despite the expectation that the 7nm node would be greater than 25% of sales in 2019 (up from 9% in 2018) and that they were adding other customers, which would imply a heavy weighting from Apple. TSMC expects a ‘slow year’ with the semi market (ex. Memory) up 1% and foundry flat, citing mobile phone seasonality (1Q at least), high inventory levels (1Q and 2Q) and an overall slowing of the global economy from 3.2% growth in 2018 to 2.6% growth in 2019. TSMC expects a recovery in 2H, and while not specific, other than an expectation that inventories would be down, Apple’s 2019 iPhone releases could have to play a part in that recovery.  TSMC is not pinning a recovery on Apple’s iPhone and while initial orders will help to alleviate the 1H malaise in 2H, it will take more than a fast processor to change the direction of iPhone sales.