The World’s Number One Chipmaker Expects the Demand to Remain Strong Until 2026

Anticipating the end of the chip shortage has already proved impossible, even for the most experienced industry analysts.
TSMC is the world's top chipmaker 6 photos
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Many expected the chip crunch to be over by the end of 2020 (the year when the whole madness emerged in the first place), and while this obviously didn’t happen, the majority of analysts then believed the production challenges would be resolved by December 2021.

Fast forward to July 2022, and here we are, still struggling with the chip shortage and with some carmakers temporarily halting their production because of the very constrained semiconductor inventory.

There are signs that the chip production is aligned with the demand, and given the sales of certain product categories, such as computers, are slowing down, some believe that for chipmakers, the fun is finally over.

Not at all, Taiwan Semiconductor Manufacturing Company, also known as TSMC, says. The company’s Q2 results are impressive, to say the least. Its revenue reached $18.16 billion for the quarter, up no less than 36.6 percent year-over-year.

But more importantly, the company’s leaders expect the chip demand to remain very strong not until 2023, as many industry analysts anticipated, but at least until 2026. TSMC, which is investing in 3nm and 2nm manufacturing (and also hopes to kick off the production by the middle of the decade), believes the market wouldn’t record any sharp reduction in demand, which means its earnings would remain at record levels.

Given that TSMC expects the demand to remain strong (obviously, the company’s expectations cover the entire industry, not just the automotive market), then it’s hard to believe clients would be able to secure too much inventory. In other words, these clients (including carmakers) wouldn’t be able to build up the required inventory and would continue to place new orders, therefore maintaining the strong demand in the long term.

TSMC is currently the world’s number one chipmaker, so there’s a very good chance its expectations are well founded. However, analysts are still reluctant when it comes to the evolution of the market in 2023 and 2024, as some still expect the overcapacity to be reached, eventually leading to a drop in demand for all types of chips.


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