Report: AMD, Intel, Nvidia, and others are slashing their orders with TSMC, with the contract manufacturer's Q1 2023 sales projected to decrease by 15% QoQ
Anton Shilov / Tom's Hardware :
Context & Ripple Effects
Tom's Hardware's year-end report that AMD, Intel, Nvidia and other customers are slashing their TSMC orders turned out to be the opening call of a full downcycle: TSMC's own subsequent filings tracked almost exactly the path the report sketched. Q1 came in below forecasts with March revenue down sharply, then Q2 marked the first quarterly decline since 2019, and by Q3 non-AI chip sales were slumping across the board.
The reason this matters beyond one foundry's P&L is that TSMC sits at the chokepoint of the contracted semiconductor cycle — when its biggest customers cut wafer commitments simultaneously, the correction propagates straight through to toolmakers and capacity plans, which is exactly what the later reporting on delayed equipment deliveries shows.
First-order effects
- TSMC absorbs the direct hit: a projected 15% quarter-on-quarter sales drop in Q1 2023, followed by consecutive YoY revenue and net-income declines through Q2 and Q3 as AMD, Intel and Nvidia work down inventory instead of booking new wafers.
Second-order effects
- TSMC pushes the pain upstream, telling major suppliers to delay high-end chipmaking equipment deliveries — capex plans like the $32B 2023 budget become the adjustment valve for demand uncertainty.
Third-order effects
- The downturn splits the market in two: AI-adjacent demand holds up while consumer/PC-era silicon slumps, pushing foundry economics toward a structure where AI customers effectively subsidize capacity that everyone else no longer fills.
The trend: The contracted semiconductor cycle is running its classic course — synchronized order cuts at the dominant foundry cascading into revenue declines and deferred equipment spending — but with AI demand emerging as the segment that breaks the pattern.