Tech industry’s pain is only going to get worse

That pain the global tech industry felt at the end of 2018 isn’t about to abate.
The outlook from Taiwan Semiconductor Manufacturing Co. last week in Taipei paints a dire picture that will persist at least through the middle of this year.
Those dark clouds I warned about in August haven’t gotten any lighter. At the time, I noted that inventories in the hardware supply chain had climbed to pre-crisis levels. Data from TSMC show stockpiles only continued to grow. By value, inventory at the end the fourth quarter jumped 40 percent from a year earlier, while days outstanding rose 29 percent – that’s in an environment where revenue itself increased just 4.4 percent.
In October, when TSMC reported third-quarter numbers, CEO C.C. Wei played down inventory concerns, forecasting a return to normalcy by the end of the fourth quarter.
He misjudged it. On January 17, he blamed a drop in demand for the failure to hit the mark. Weakness in high-end smartphones, was the reason, he said. Now TSMC starts 2019 with near-record inventory while forecasting almost no revenue growth for the year.
It goes beyond TSMC, with the company predicting the global chip industry will expand just 1 percent this year. Besides Apple, TSMC’s clients include pretty much every hardware and chipmaker in the world – so if TSMC hurts, everyone hurts.

— Bloomberg