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Tim Culpan
@tculpan
, 9 tweets, 3 min read Read on Twitter
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TSMC’s disastrous outlook today ties together a lot of the concerns I’ve had about the tech industry over the past six months.
Here’s a collection of my thoughts, not as a victory lap, but to show how there’s been so many signs if only people stopped to look
When I ran the numbers back in August, I didn’t know what I’d find. I was actually just playing around with spreadsheets and doing a bit of trend-spotting.
What I found surprised me. I had no idea things had ballooned so much!

bloomberg.com/opinion/articl…
TSMC’s 3rd guidance cut in a year, outlined in Oct, gave weight to what earlier inventory data showed me
This was one of the 1st clear signs that high inventory & weakening demand were linked
It’s worth noting that at the time, iPhone didn’t look too bad

bloomberg.com/opinion/articl…
In October I wrote:
“TSMC found an instant hit with its latest production technology – 7nm ... But early demand for 7nm won’t mean much if consumers don’t buy the end product (mostly high-end smartphones) in sufficient droves.”
This turned out to be more true than I imagined..
Once again, inventory and demand:
“And Coldren (Lumentum CFO) goes on to note that you can’t really split the issue of excess inventory and weaker demand. They’re related.”

bloomberg.com/opinion/articl…
A Nov. scoop from @debbywuintaipei was important
It told us that Foxconn not only saw troubles, but it wasn’t just a hiccup.
I’ve followed Foxconn & Terry Gou for ~15yrs. He’s ever the optimist. But it’s his bouts of realism that shouldn’t be ignored
bloomberg.com/opinion/articl…
When Apple did finally cut its own guidance this month, it should have came as no surprise.
But Apple is a minority player in the hardware market.
So I warned that people should expect that Apple isn’t alone

bloomberg.com/opinion/articl…
Which brings us to today’s TSMC outlook: forecast of 1% global chip industry growth & minimal foundry growth
Importantly, CFO Lora Ho told me that high inventories consist primarily of raw wafers and 7nm chips in production (we know who the customer is)

bloomberg.com/opinion/articl…
So what’s next?
I don’t see how the industry can escape inventory write offs.
This may come via higher sales-and-marketing spend (distributors sell your goods at discount, you pay them the difference from full price)
Job cuts/freeze & capex cuts
Firesales to shift stock
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