Leading contract chipmaker Taiwan Semiconductor Manufacturing Co (NYSE:TSM) has reportedly instructed major suppliers to postpone the delivery of high-end chipmaking equipment. This move comes as the crucial Apple Inc (NASDAQ:AAPL) and Nvidia Corp (NASDAQ:NVDA) supplier battled delays at its $40 billion chip factory in Arizona, signaling its growing apprehension about customer demand.
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While suppliers anticipate this delay to be short-term, TSMC’s caution reflects concerns about the outlook for the market, primarily driven by weaker economic conditions, slower recovery in China, and softer end-market demand, Reuters reports.
The affected companies include Dutch firm ASML Holding N.V. (NASDAQ:ASML), which manufactures lithography equipment crucial for high-end chipmaking. ASML’s CEO, Peter Wennink, recently mentioned deferring some orders for its high-end tools. ASML is operating at maximum capacity, and its overall sales will likely grow by 30% this year. TSMC’s decision to delay equipment delivery aligns with its efforts to control costs amidst evolving market conditions.
Meanwhile, TSMC postponed production at its Arizona plant to 2025 due to recruitment difficulties and union opposition regarding hiring workers from Taiwan. This delay has put additional pressure on the company as it grapples with the global chip shortage and its impact on production timelines.
Other players, including Apple, have echoed concerns about the chip industry’s demand rebound. The tech giant recently unveiled a new series of iPhones, but notably, it did not raise prices, reflecting a cautious approach amidst a smartphone market slowdown.
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Additionally, reports of Beijing instructing government employees to stop using iPhones at work and Huawei Technologies Co’s launch of a flagship phone using Chinese-made chips have added to the unease in the chip industry.
Price Action: ASML shares traded lower by 2.88% at $603.96 premarket on the last check Friday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
