TAIPEI (Reuters) – Taiwanese chipmaker TSMC on Thursday forecast a 16% drop in revenue for the current quarter, amid a slowing global economy and as the group struggles to sell its stocks.

TSMC, the world’s largest maker of chips for products as diverse as phones, cars and advanced computers, faces an uncertain industrial outlook and rising tensions between the United States and China that could affect it.

Semiconductor maker forecasts revenue of $15.2-16 billion (€13.8-14.5 billion) for the quarter ending June 30, down from 18 .16 billion recorded in the same period of 2022.

The Apple supplier posted a 2% increase in net profit in the first quarter, above expectations.

However, it was the weakest quarterly growth in nearly four years, as global economic difficulties depress demand for chips.

Group chief executive CC Wei said on a conference call that first-quarter results were hurt by ‘weaker end-market demand’, while inventory levels were ‘significantly higher’ than expected and that this situation could last until the third quarter.

The group saw its net profit increase between January and March to 206.9 billion Taiwan dollars (6.76 billion dollars), against 202.7 billion Taiwan dollars a year earlier and against 192.8 billion expected in average for analysts, according to Refinitiv data.

First-quarter revenue fell 4.8% year-on-year, in line with the company’s forecast.

Analysts say TSMC’s sales will come under pressure in the second quarter, a slow period for the industry, and major customers will reduce orders.

First-half revenue is expected to decline around 10% in US dollars from a year earlier, the group said, while annual revenue could decline between 1% and 5% (“a low-to-single mid-digit percent”).

The managing director further said that the group was evaluating the possibility of building a factory in Europe specializing in chips for the automotive industry.

(Report Yimou Lee and Sarah Wu; written by Christopher Cushing, Diana Mandiá, edited by Blandine Hénault)

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