Full recovery expected next year
The global chip foundry market seems to have hit its lowest point during the first half of this year.
TSMC and sources based in South Korea TheElec talked to believe the market will start seeing demand recovery again in the third quarter of this year.
The main driver of this recovery seems to be ChatGPT which kicked off the high demand for chips for AI applications.
TSMC, the world’s largest chip foundry, manufactures Nvidia’s A100 and H100.
The Taiwanese chip giant’s revenue in May was 7.35 trillion won, down 4.9% from a year earlier but higher by 19.3% than the previous month, a positive sign for a turnaround.
In its shareholders’ meeting earlier this month, TSMC said it has passed the down cycle in profits and inventories of customers were decreasing.
The company has finished preparation for the next up cycle of the market that is expected to start next year, TSMC noted.
Compatriot foundry UMC’s May earnings also showed a slight improvement from April.
As listed Taiwanese chip companies reveal their revenue for the prior month every month, they are a barometer of the direction of the global chip market in general.
Chinese foundry SMIC also reiterated a similar view, saying demand for chips is expected to grow in the mid-to-long-term.
Sources at South Korean foundry companies Samsung and DB Hitek said they are also expecting a similar forecast.
While their second-quarter earnings will be worst than the first, the companies expect factory operation rates, which are at around 70% as of the first quarter, to start recovering during the second half from new product launches of customers.
Due to US sanctions, more Chinese fabless chip companies are also approaching South Korean foundries to handle their manufacturing, the sources also said.