TSMC sales down 45%, inventory now at 100 day supply
Taipei (Taiwan) - In a real-world example of how tightly wound manufacturing efforts are to global consumption, the Taiwan Semiconductor Manufacturing Company (TSMC) is reporting it now has a 100 day-of-inventory (DOI) supply due to significantly lowered sales.
Two of TSMC's major customers, Nvidia and Xilinx, have revised their Q4 revenue down 40% to 50% and 15% to 25%, respectively - which also translates to a decrease in future orders on anticipated market needs. TSMC is expecting to see a 35% to 45% overall sales decline sequentially, and a continuing increase in DOI - which is up from 90 days in Q4'2008, an increase of 11.1%.
TSMC's revenues were down 20.2% in Q3'2008, which means a 35% to 45% additional decrease will be in line with the year-on-year decline seen in December, 2008 of 54.8%.
TSMC is not alone in their growing inventory supply. Other manufactures in the DRAM and flash markets have seen significant increases in inventory oversupply - so much so that as of mid-January, their overall global production is down 22% in an attempt to stabilize prices, according to a published IDC report. The production reduction plan appears to be working as several market research firms are now noting bottoms seen within the last week or two, including slight up-ticks in the single-digit percentage range for NAND flash and DDR2.