TSMC Expects Another Weak Quarter as Smartphone Woes Persist

TSMC is predicting another weak quarter for revenue growth, as the chipmaker to Apple and Huawei grapples with global smartphone market malaise, according to Bloomberg.

The world’s largest made-to-order chipmaker is predicting revenue of $7.55 billion to $7.65 billion in the June quarter, versus an average estimate for $7.6 billion and little changed from a year earlier. This week, TSMC reported a larger-than-anticipated 32 percent plunge in net income during the January to March period.

TSMC is showing the strains of a plateauing smartphone market as Apple, its biggest customer, seeks to boost growth with services rather than hardware. That’s compounding the challenge of dealing with Chinese customers experiencing a slowdown and weaker demand ahead of new fifth-generation wireless networks. Global smartphone volumes are expected to drop 0.8 percent this year, according to research firm IDC.

Revenue should grow “slightly“ over all of 2019 thanks to the typical launch of new smartphone models ahead of the holiday shopping season, CEO C. C. Wei said. Net income fell to NT$61.4 billion ($2 billion) in the three months ended March, the Hsinchu, Taiwan-based company said. The Taiwanese chipmaker’s output in the past quarter was affected by a chemical contamination incident that led the company to cut its guidance, just a few months after a virus disrupted production. For 2019, TSMC is sticking to its plan for $10 billion to $11 billion in capital spending.