IT product inventory depletion was stagnant as the market faced macroeconomic pressure in first-half 2023, resulting in chip demand experiencing a nosedive. The average utilization rate of the Taiwan-based foundries dropped to 70% as of second-quarter 2023, dragging down their revenue performance in first-half 2023.
In second-half 2023, new 5G smartphones, notebooks, PCs and servers will become available in the market, but the traditional strong season is likely to get suppressed amid poor macroeconomic conditions. Even if TSMC's 3nm revenue enjoys leaping growth, allowing the Taiwan foundry industry to perform better in second-half 2023 compared to first-half 2023, their whole-year 2023 revenue will still exhibit a significant decline from the 2022 level.
Amid the challenging macroeconomic environment, the IT supply chain's inventory adjustment has extended into second-half 2023, dampening chip demand. Looking into 2024, the Taiwan foundry industry's revenue is expected to rebound but the growth may still be limited as the gloomy economic outlook will continue to curtail consumer spending on IT devices.
Table 1: Key factors affecting Taiwan's wafer foundry industry in 2H23, demand and supply
Table 2: Key factors affecting Taiwan's wafer foundry industry in 2024, demand and supply
Chart 1: Global major IT products on-year shipment growth, 2019-2023
Chart 2: Taiwan key wafer foundry revenues, 2Q22-4Q23 (US$b)
Chart 6: Taiwan key wafer foundry annual revenues, 2019-2024 (US$b)
Chart 8: Outlook of major economies by key institutes, 2022-2024
