TSMC: Q2 guidance reflects 'severe' inventory adjustment by customers
During the company's Q1 earnings conference call earlier Thursday, TSMC executives said, "We expect Q2 demand will be weaker than Q1 due to supply chain inventory management during Q2 and mobile product seasonality... Our Q2 revenue guidance reflects a quite severe inventory adjustment by our customers, particularly in smartphone and PC markets. However, the overall end-market smartphone demand appears stable in Q2. We estimate that fabless COI should approach seasonal level at the end of Q2, and demand for our products will be poised for a strong growth in Q3. Given the very strong demand in 2H last year, we maintain our 2H17 growth rate estimate of 5% year over year, and our full 2017 growth rate target remains to be 5%-10% in U.S. dollar, as we previously stated. On the forecast of overall semiconductor market growth rate, compared to three months ago, we raised it to 7% from 4% due to a stronger memory market. Semiconductor excluding memory market growth rate remains at 4% this year. We also revise foundry revenue growth to 5% from 7% due to this elevated inventory in the supply chain."