Analysis of Supply Chain Information Reflected in Changes to TSMC's Inventory Turnover Days

Based on obtained financial data and market information, I conducted a systematic analysis of changes to Taiwan Semiconductor Manufacturing Co., Ltd. (TSM)'s inventory turnover days. Below is a detailed supply chain interpretation:

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Reporting Period	Inventory Turnover Days	Inventory Turnover Ratio	Quarter-over-Quarter Change
2024 Q1	72 days	1.26	-
2024 Q2	73 days	1.24	+1 day
2024 Q3	75 days	1.21	+2 days
2024 Q4	76 days	1.19	+1 day
2025 Q1	75 days	1.21	-1 day
2025 Q2	74 days	1.30	-1 day
2025 Q3	68.27 days	1.34	-5.73 days

: GuruFocus Financial Data [1][2], Transcript of TSMC’s Q3 2025 Earnings Conference [3]

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TSMC’s inventory turnover days dropped sharply from 74 days in Q2 2025 to 68.27 days in Q3 2025, a 7.7% decline. This notable change

:

• Full Utilization of Advanced Process Capacity
  : TSMC’s advanced process capacities such as 7nm, 5nm, and 3nm continue to maintain high utilization, particularly in the AI GPU and high-performance computing (HPC) chip sectors [3]
• Strong Revenue Growth
  : TSMC achieved NT$325.96 billion in revenue in Q3 2025, representing a 36% year-over-year increase and a 14% quarter-over-quarter increase [4]
• Healthy Inventory Levels for Fabless Semiconductor Companies
  : According to comments from TSMC’s management during the Q4 2024 earnings conference, fabless semiconductor inventory levels returned to healthy levels by the end of 2024 [5]

The decline in inventory turnover days indicates

:

Supply Chain Segment	Inventory Turnover Days (Q4 2024)	Trend
TSMC (Manufacturing)	74 days	↓ Declining
Semiconductor Materials Industry	138 days	↓ Down 8 days
Global Semiconductor Supply Chain	104 days	↓ Down 5 days
OEM/ODM (EMS)	53 days	↑ Up 4 days
End Customers	34 days	↑ Up 1 day

: Inventory turnover is accelerating in upstream manufacturing links, while inventory levels at downstream OEM/ODM and end customers have slightly increased, indicating [6][7]

The trajectory of changes to TSMC’s inventory turnover days

:

• 2024 Quarterly Increase Phase
  : Inventory turnover days gradually rose from 72 days to 76 days, reflecting that the industry was still in the destocking phase at that time
• 2025 Q3 Sharp Decline
  : The decline expanded significantly, indicating
  the inventory adjustment cycle has ended
  , and the industry has entered a new boom cycle
• Industry Data Confirmation
  : The global semiconductor market reached $346 billion in size in the first half of 2025, representing an 18.9% year-over-year increase [8]

In addition to full utilization of advanced processes,

, which helps improve overall inventory turnover efficiency:

• TSMC management expects the Foundry 2.0 industry to grow 10% year-over-year in 2025 [5]
• Demand for mature processes continues to recover in the industrial and automotive electronics sectors
• Improved capacity utilization directly drove the decline in inventory turnover days

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1. Demand Sustainability
   : Demand for AI chips is not only strong in the short term but also has a structural growth foundation
2. Supply Chain Resilience
   : As the global leader in wafer foundry, TSMC’s improved inventory efficiency reflects the healthy recovery of the entire semiconductor supply chain
3. Smooth Price Transmission
   : Gross margin rose to 59.9%, indicating that cost pressures can be effectively passed downstream [3]

1. Inventory Increase at OEM/ODM
   : Inventory turnover days in the EMS segment increased by 4 days to 53 days; attention should be paid to signs of excessive inventory replenishment downstream
2. Competition in Mature Processes
   : The recovery in mature process utilization rates may face pressure from competitors such as SMIC and UMC
3. Geopolitical Risks
   : Supply chain uncertainty may affect long-term inventory strategies

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TSMC’s inventory turnover days shifted from a gradual increase in 2024 (peaking at 76 days) to a sharp decline in Q3 2025 (68.27 days). This change

:

Dimension	Conclusion
Demand Side	Strong demand for AI and high-performance computing drives improved capacity utilization
Supply Side	Mature process utilization rates bottomed out and recovered, with manufacturing efficiency optimized
Inventory Cycle	The semiconductor industry’s destocking cycle has ended, entering an upward boom phase
Supply Chain Health	Upstream manufacturing links are recovering first, with downstream inventory replenishment willingness increasing

This trend has

, indicating that the industry’s structural recovery is strengthening, and demand for advanced processes related to AI will continue to support industry growth.

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[1] GuruFocus - TSMC Inventory Turnover Data (https://www.gurufocus.cn/stock/TSM/term/inventory_turnover)

[2] GuruFocus - Taiwan Semiconductor Manufacturing Co Inventory Turnover (https://www.gurufocus.com/term/inventory-turnover/TSM)

[3] Hstong.com - AI Demand Surges! Transcript of TSMC’s Earnings Conference (https://www.hstong.com/news/detail/26011518400249767)

[4] Sina Finance - What Are the Highlights of TSMC’s Latest Quarterly Results (https://cj.sina.cn/articles/view/2972154552/b1277ab8020017ryc)

[5] TSMC Investor Relations - Q4 2024 Earnings Call Transcript (https://investor.tsmc.com/chinese/encrypt/files/encrypt_file/reports/2025-01/84aeb15bbe33894365d33f52e027c5268ba95dcf/TSMC 4Q24 Transcript.pdf)

[6] Minsheng Securities - 2025 Semiconductor Industry Investment Strategy Report

[7] Kaiyuan Securities - Report on Sustained Recovery of the Electronics Industry Cycle

[8] Securities Times - Report on Strengthening of Semiconductor Industry’s Structural Recovery (https://www.stcn.com/article/detail/3318266.html)