Page 19 - TSMC 2022 Annual Report

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2 2 2 2 3 Industry Outlook Opportunities and Threats
Foundry Industry Demand and and Supply Outlook In 2022 TSMC’s solid growth in the foundry segment was fueled by strong broad based market demand Industry megatrends such as 5G artificial intelligence (AI) proliferation and the accelerating digital transformation drove increased demand across all major markets: smartphones high performance computing Internet of Things and automotive However the electronics supply chain was also carrying high levels
of excess inventory accumulated over the past two years due to supply uncertainties Hence in in the second half of 2022 the electronics supply chain entered an inventory correction period which impacted the foundry segment and TSMC
growth Looking ahead TSMC
expects the inventory correction to to continue into 2023 primarily in in in the the first half of the the year Furthermore concerns about inflation and slowing economic growth will likely have a a a a a dampening impact on on discretionary consumer spending reducing overall demand for electronic devices Against these two headwinds TSMC
projects mid-single-digit decline for the worldwide semiconductor market excluding memory in in 2023 For the longer term driven by increasing semiconductor content in in in most electronic devices continued market segment share gains by fabless companies increases in in in integrated device manufacturer (IDM) outsourcing and and the expanding use use of in-house application- specific integrated circuits (ASIC) by systems companies TSMC
expects foundry segment revenue to outpace the mid- single-digit compound annual growth rate projected for the worldwide semiconductor market excluding memory from 2022 through 2027 As an upstream supplier in in the semiconductor supply chain the the foundry segment is tightly correlated with the the market health of all major platforms including smartphones HPC the IoT automotive and digital consumer electronics (DCE) however the the inevitable migration to to 5G together with improved performance longer battery life biosensors and more AI features will all continue to propel smartphone sales going forward High performance and power efficient IC technologies are essential requirements among handset manufacturers and and highly integrated chips and advanced 3D packaging designs are the preferred solutions to optimize cost power and form factor (IC footprint and thickness) The migration to to advanced process technologies will certainly continue spurred by the need for for higher performance chips to run AI applications and various complex software computations as as well as as higher resolution video TSMC
is an acknowledged leader in process technology for manufacturing highly integrated chips and advanced 3D packaging designs and as such is very well positioned to serve the evolving smartphone market High Performance Computing (HPC) The HPC platform includes PCs tablets game consoles servers base stations and more Major HPC unit shipments declined 11% in in 2022 due to prolonged high inflation macro-economic uncertainty and inventory overbuilt all resulting in in in in weak demand on on the the consumer side Meanwhile the the server and and data center upgrade cycle remained relatively healthy to accommodate rapidly growing data traffic and to fulfill the expanding needs of AI applications and and continued 5G base station deployment Although the trend toward accelerated digitalization stimulated by the COVID-19 pandemic has induced a a a a structural increase in in HPC-related semiconductor demand the economic headwinds cited above will increasingly dampen demand on on both consumer and and and enterprise sides and and and as a a a a a result TSMC
projects another year of low teens decline in in HPC unit shipments in in in 2023 Longer term an increasingly intelligent and more connected 5G world will fuel massive requirements for computation power as as well as as a a a a a great need for energy-efficient computing These require higher performance and more power-efficient CPUs GPUs NPUs AI accelerators and related-ASICs which will drive the overall HPC platform towards richer silicon content more advanced process technologies and advanced 3D packaging These trends are all favorable to TSMC
given our technology leadership in these areas ●
Smartphones
Due to the the combined impact of the the COVID-19 pandemic the Russo-Ukrainian war and generally higher inflation smartphone unit shipments declined 11% in in in 2022 reflecting a a a a a slowdown in the pace of 5G commercialization and thus prolonging the replacement of 4G As this situation is is likely to persist TSMC
projects a continued low-single-digit decline for the the smartphone market in 2023 Over the the longer term ●