Taiwan Semiconductor Semiconductor Manufacturing Company (TSMC), which had disappointing sales results in April, has seen its capacity utilization soar in May, according to industry sources.

TSMC's revenues fell to a 37-month low of NT$56.87 billion (US$1.89 billion) in April 2017. A seasonal slowdown in chip demand for iPhone and many major Android phone makers' decision to push back their new product roll-outs led to the foundry's poor sales results during the month, the sources said.

Slow smartphone demand in China that had caused excessive levels of inventory in the supply chain was another reason behind TSMC's disappointing April results, the sources noted.

However, TSMC is expected to see its monthly revenues rebound in May and the following months given that its chip production for Apple's new-generation CPU has kicked off and inventory adjustments at its other smartphone chip clients are coming to an end, the sources indicated.

Mass production of many new Android phones, which will come with new features to better compete with the 2017 iPhone series, is also expected to kick off around the end of the second quarter, the sources said.

The smartphone shipment outlook for the second half of 2017 is positive, the sources suggested. TSMC and other major foundry chipmakers will likely see their supply fall short of demand during the period, the sources said.