Analysis: the total sales of Foxconn, TSMC, and 17 more major IT companies in Taiwan fell 19.8% YoY to ~$35B in June 2023, the largest drop since at least 2013
the sharpest drop since tracking of comparable data began in 2013. https://asia.nikkei.com/...
Context & Ripple Effects
The June aggregate is the revenue-line confirmation of a decline that started in the order book: Taiwan's chip exports to China and Hong Kong fell 31.3% YoY in February, the worst since 2009, and Foxconn's Q4 2022 report, which forecast slumping consumer electronics demand for 2023, flagged the assembly side months earlier. TSMC's Q1 revenue up just 3.6% with March down 15% showed even the foundry leader was not immune.
First-order effects
- The 19.8% drop across Foxconn, TSMC and 17 peers — the largest since tracking began in 2013 — lands a week before TSMC's first quarterly revenue decline since 2019, with all non-AI chip sales lagging, confirming the consumer electronics correction is deepening rather than bottoming.
- China-exposed suppliers take the direct hit: the February collapse in chip exports to China and Hong Kong flows straight into June company revenue lines at both the foundry and assembly ends of Taiwan's stack.
Second-order effects
- Demand bifurcates inside the same companies: AI and datacenter orders become the only growth line, pressuring TSMC's capacity and mix decisions toward AI silicon while consumer chips compete for shrinking wafer allocations.
- With foundry and assembly utilization falling, downstream smartphone and PC makers gain bargaining power, forcing Taiwanese suppliers to compete harder on price for a smaller pool of non-AI orders.
Third-order effects
- If the pattern holds, Taiwan's IT complex structurally rotates away from China-bound consumer electronics: Foxconn later reporting cloud and networking products above 50% of revenue for the first time, and TSMC's planned sensor JV with Sony in Kumamoto, both point to demand and geographic diversification as the response to a base that can shed a third of its China exports in a single month.
The trend: Taiwan's IT sector is rotating from China-bound consumer electronics toward AI and datacenter demand, with the June 2023 collapse marking the trough of the consumer cycle.