This is not investment advice. The author has no charge in any of the mentioned actions. Wccftech.com has a disclosure and ethics policy.
Taiwan Semiconductor Manufacturing Company (TSMC) has responded to reports that its cutting-edge 3 nanometer (nm) chip manufacturing process technology is experiencing delays. Reports today from research firms TrendForce and Isaiah Research noted that TSMC’s 3nm process will face delays and affect the company’s partnership with US chip giant Intel Corporation, which itself has suffered manufacturing problems for several years. years.
TSMC’s response was standard boilerplate, as the company declined to comment on its customer orders, noting that manufacturing technology was proceeding on schedule.
TSMC stresses capacity expansion plans are on schedule following reports of setbacks
The two reports were the latest in a series of news stories that have cast doubt on TSMC’s 3nm manufacturing plans. The first news came earlier this year when initially rumoredand then confirmed that Korean chipmaker Samsung Foundry will start 3nm production ahead of TSMC.
Statements made by the head of TSMC, Dr. CC Wei has pointed out that his company start manufacturing 3nm chips during the second half of this year. as TSMC seeks to maintain the technological prowess that has made it the world’s largest contract chipmaker.
TrendForce Report shared that the company believes the delay in manufacturing 3nm for Intel will hurt TSMC’s capex as it could end up cutting spending in 2023. It also didn’t shy away from blaming Intel, claiming that the design that was initially issued had caused it to manufacturing will jump to 1H 2023 from 2H 2022, which has now been delayed to the end of 2023.
This, in turn, has affected TSMC’s capacity utilization estimates, with the company wary of capacity sitting idle as it struggles to secure 3nm orders. TrendForce also shared that Apple will be TSMC’s first 3nm customer, with products due out next year, and AMD, MediaTek, and Qualcomm will mass-produce 3nm products in 2024.
Isaiah Research was more forthcoming with details of the delay, sharing the number of wafers initially expected to be made and the decline after the alleged delay. Isaiah highlighted that TSMC had initially planned to produce 15,000 to 20,000 3nm wafers per month by the end of 2023, but has now dropped to 5,000 to 10,000 wafers per month.
However, addressing concerns about spare capacity left over from the downsizing, the research company remained optimistic, noting that most equipment (80%) for advanced manufacturing processes such as 5-nanometer and 3-nanometer nanometres, are interchangeable, which means that TSMC retains the ability to use it for other customers.
TSMC’s response to the whole affair sent to the Taiwanese publication United Daily News was brief, with the signature declaring that:
“TSMC does not comment on the business of individual customers. The company’s capacity expansion project is proceeding as planned.”
The semiconductor industry, currently facing a historic downturn due to supply and demand mismatches in the wake of the coronavirus pandemic, has been considering capacity reductions and capital expenditures for quite some time. Chinese foundries have lowered their average selling prices (ASPs) and chipmakers in Taiwan have started offering different prices for different nodes to ensure demand doesn’t drop.
However, TSMC has made no such announcements, and the question of balancing capacity reductions with a pick-up in demand, particularly for newer products, remains a thorn in the side of chipmakers, as for On the one hand, they risk spending too much on idle machines and on the other, reducing revenue capture in the event of increased demand.
