Lora Ho, SVP and CFO of TSMC said that some of the falls were due to the last quarter being better than expected with stronger demand for TSMC's 16-nanometer technology and a more favourable exchange rate.

"Moving into first quarter 2017, we forecast the demand is weaker than the prior quarter due to mobile product seasonality and slightly above seasonal supply chain inventory at the end of 2016," she said.

But TSMC's revenue guidance for first-quarter 2017 also came below market watchers' general outlook of 5-8 per cent sequential decreases so something is clearly not going well.

Industry sources attributed TSMC's pessimistic revenue outlook for the first half of 2017 to a slowdown in 16nm chip demand, as well as delayed shipments of 10nm chips to “a major customer”.

TSMC said it has already seen Apple cut back on wafer starts for its 16nm A10 SoC chips.

The foundry can’t increase output of 10nm chips until the third quarter of 2017, due mainly to MediaTek's revised schedule of the Helio X30 SoC launch. TSMC had to fulfil orders for the Helio X30-series chips in the first quarter of 2017, but the schedule has been postponed to the end of the second quarter.

TSMC expects to have another year of record revenues and profits for the entire year. Revenues are forecast to increase 5-10 percent from 2016 company chairman Morris Chang told the January 12 investors meeting. Chang also claimed TSMC will do rather well in the 10nm and 7nm process segments with a higher market share than that in the 16nm process segment.