TSMC's Revenue Cut Echoes Taiwan's Economic Uncertainties: Report

Taiwan's economic momentum appears to be faltering, with recent figures hinting at the possibility of subdued growth for this year. Amidst the global decline in electronics demand, the nation's economic trajectory seems set to be its least impressive since 2015.

Official figures disclosed by the government's statistical division present a sobering picture, Bloomberg reports. 

Previously, an optimistic growth of 2.04% was anticipated for 2023. However, Friday's announcements marked the third consecutive time the projection was scaled down, this time to 1.61%.

Also Read: Taiwan Semiconductor Stock Falls After Q2 Earnings - How Did It Perform?

Reflecting the Global Electronics Downtrend

The nation's export forecast also took a hit, now projected to decline by 9.51%, steeper than the prior estimate of a 7.27% fall. 

Furthermore, consumers should brace themselves for a price hike, as the inflation rate will likely hover around 2.14%, a slight moderation from the earlier 2.26% prediction.

The numbers for the second quarter mirror the overarching trend. The economy's growth for April-June stood at 1.36%, revised from the preliminary 1.45% figure, spelling challenges for the government, especially with the looming presidential elections in January. 

A sub-2% growth could equip the opposition with critiques against the current Democratic Progressive Party candidate and Vice President, Lai Ching-te.

Economists Weigh In

Interestingly, according to a Bloomberg survey, some experts have an even grimmer outlook. They project a mere 0.9% growth, the weakest since the 2009 financial crisis. Taiwan Semiconductor Manufacturing Co TSM, the nation's flagship firm, has already signaled caution by trimming its annual revenue outlook. 

The critical Apple Inc AAPL and Nvidia Corp NVDA supplier expressed skepticism about the longevity and sustainability of the anticipated surge in AI chips demand. In June, TSMC cut its 2023 capital expenditure outlook to closer to the bottom end of the previously forecast $32 billion - $36 billion range.

TSMC reaffirmed projections for revenue in the first half of 2023 to decline by about 10% in U.S. dollar terms.

The contract chipmaker also reaffirmed a low- to mid-single-digit revenue decline in 2023 

Meanwhile, China - Taiwan's predominant export destination, showed scant signs of buoyancy. Chinese authorities have resorted to rate cuts to stave off an economic downturn. 

In tandem, there have been concerted efforts to stabilize the financial markets, currently rocked by disappointing economic indicators, a slackening property market, and shadow lending sector turmoil.

Price Action: TSM shares traded lower by 1.00% at $90.72 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.