(Bloomberg) — Demand for consumer electronics including smartphones, PCs and TVs has been hurt by China’s lockdowns, the head of the world’s biggest contract chipmaker said, adding to concerns about the economic impact of the country’s measures to contain Covid-19.
Taiwan Semiconductor Manufacturing Co. Chairman Mark Liu said his company isn’t revising down its forecasts for sales or capital spending for this year. Global demand for chips used in vehicles, internet-of-things gadgets and high performance computing remains strong, he said at an appearance in Hsinchu, Taiwan, as head of the Taiwan Semiconductor Industry Association.
China’s lockdowns are likely costing the country at least $46 billion a month, or 3.1% of GDP, in lost economic output, an economist predicted based on the assumption that cities generating about 20% of China’s gross domestic product are currently imposing targeted lockdowns. That cost would double if those areas had to follow Shanghai and impose stricter policies requiring most residents to remain at home.
TSMC will rearrange its output priorities to adapt to the new demand profile, Liu said. The company is keeping its production in Shanghai going, he said.
In January, TSMC predicted its sales will grow at more than 20% clip in U.S. dollar terms this year. It forecast sales of $16.6 billion to $17.2 billion for the first quarter and said it plans to spend $40 billion to $44 billion expanding and upgrading capacity in 2022.
However, there have since been signs that the global economic recovery is losing steam. Shanghai’s lockdown will have even greater ramifications for China and the world than the already significant impact from the lockdown in the tech hub of Shenzhen, according to Bloomberg Intelligence.
The slowdown is weighing on the tech sector. Apple Inc. is planning to cut its iPhone SE output target in the next quarter, Nikkei reported. Earlier this week, JPMorgan Chase & Co. analysts trimmed their estimates for PC and server shipments for this year.
Liu also urged the Taiwanese government to get ready to make a decision about opening up the country’s borders as soon as possible.
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