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Taiwan Semiconductor Manufacturing Company (TSMC) has responded to reports that its flagship 3 nanometer (nm) chip manufacturing technology is suffering from delays. Earlier today, reports from research firms TrendForce and Isaiah Research outlined that TSMC’s 3nm process will face delays and affect the company’s partnership with US chip giant Intel Corporation – which has itself suffered from production problems for several years.
TSMC’s response was a standard template, as the company declined to comment on its customers’ orders and indicated that manufacturing technology was progressing on schedule.
TSMC stresses capacity expansion plans are on schedule after reports of hiccups
The two reports were the latest in a string of news that cast doubt on TSMC’s 3nm production plans. The first news came earlier this year when it was was originally rumoredand then confirmed that Korean chip maker Samsung Foundry will begin 3nm production before TSMC.
Statements made by TSMC chief Dr. CC Wei outlined that his company will are starting to produce 3nm chips in the second half of this year. as TSMC seeks to retain the technological prowess that has made it the world’s largest contract chipmaker.
The TrendForce report shared that the firm believes the delay in 3nm production for Intel will hurt TSMC’s capex as it could lead to cost cuts in 2023. It also didn’t shy away from placing some of the blame on Intel, claiming that the released design initially had production jumping to 1H 2023 from 2H 2022 – which has now been pushed back to late 2023.
That, in turn, has weighed on TSMC’s capacity utilization estimates — and the firm is wary of idle capacity as it struggles to secure 3nm orders. TrendForce also shared that Apple will be TSMC’s first 3nm customer – with products coming out next year, and AMD, MediaTek and Qualcomm will mass-produce 3nm products in 2024.
Isaiah Research was more forthcoming with the specifics of the delay, as it shared the number of wafers originally expected to be produced and the reduction after the alleged delay. Isaiah outlined that TSMC originally planned to produce 15,000 to 20,000 3nm wafers per month by the end of 2023, but this has now been reduced to 5,000 to 10,000 wafers per month.
However, addressing concerns about spare capacity left due to the downsizing, the research firm remains optimistic as it points out that the majority of equipment (80%) for advanced manufacturing processes such as 5 nanometers and 3 nanometers is interchangeable, meaning , that TSMC reserves the right to use it for other customers.
TSMC’s response to the whole affair, sent to Taiwan’s United Daily News, was brief, like the firm stating that:
“TSMC does not comment on the business of individual customers. The company’s capacity expansion project is progressing as planned.”
The semiconductor industry, which is currently facing a historic downturn due to supply-demand mismatches in the wake of the coronavirus pandemic, has been considering capacity and capital spending cuts for quite some time. Chinese foundries have cut their average selling prices (ASPs), and chipmakers in Taiwan have started offering different prices for different nodes to ensure demand doesn’t fall.
TSMC has made no such announcements, however, and the issue of balancing capacity cuts with increased demand, especially for newer products, remains a thorn in the side of chipmakers, as on the one hand they risk spending too much on idle machines and the other, reducing revenue capture in the event of an increase in demand.