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Taiwan Semiconductor Manufacturing Co. (TSMC) is straining to fulfill demand from high buyer Apple for 3-nm chips. The corporate’s device and yield struggles have impeded the ramp to quantity manufacturing with world-leading expertise, in accordance with analysts surveyed by EE Occasions.
TSMC and Samsung, its subsequent largest rival within the foundry enterprise, are racing to be first in 3-nm manufacturing for patrons like Apple and Nvidia in high-performance computing (HPC) and smartphones. TSMC turned the most recent to say 3-nm management in its quarterly outcomes announcement final week.
“Our 3-nm expertise is the primary within the semiconductor trade to high-volume manufacturing with good yield,” TSMC CEO C.C. Wei mentioned in a convention name with analysts. “As our clients’ demand for N3 [TSMC terminology for 3 nm] exceeds our potential to provide, we count on N3 to be absolutely utilized in 2023, supported by each HPC and smartphone purposes. Sizable N3 income contribution is predicted to start out within the third quarter, and N3 will contribute a mid-single–digit proportion of our whole wafer income in 2023.”
TSMC, Samsung and Intel are aiming for expertise management to serve clients that embrace Apple, Nvidia and others designing knowledge heart CPUs. The eventual chief will garner the lion’s share of income within the foundry enterprise, which for many years has outpaced the expansion of the general semiconductor trade. For now, TSMC retains the highest spot, in accordance with Mehdi Hosseini, senior fairness analysis analyst with Susquehanna Worldwide Group.
The trick for a foundry is making extraordinarily costly manufacturing instruments from a number of suppliers carry out collectively at peak effectivity.
“TSMC, in our view, stays the popular foundry alternative for modern nodes as Samsung Foundry has but to exhibit a steady modern course of expertise, all whereas IFS [Intel Foundry Services] is years away from providing a aggressive answer,” Hosseini mentioned in a report he supplied to EE Occasions.
Main-node clients
Within the second half of 2023, TSMC will ramp Apple’s A17 and M3 processors on the N3 node, in addition to ASIC-based server CPUs at N4 and N3, in accordance with Hosseini mentioned. TSMC will even fabricate Intel’s Meteor Lake graphic chiplets at N5, AMD’s Genoa and Nvidia’s Grace processors at N5 and N4, in addition to Nvidia’s H100 GPU at N5, Hosseini mentioned within the report.
Apple can pay TSMC for recognized good die somewhat than commonplace wafer costs, no less than for the primary three to 4 quarters of the N3 ramp as yields climb to round 70%, Brett Simpson, senior analyst at Arete Analysis, mentioned in a report supplied to EE Occasions.
“We predict TSMC will transfer to regular wafer-based pricing on N3 with Apple throughout the first half of 2024, at round $16-17K common promoting costs,” Simpson mentioned. “At current, we consider N3 yields at TSMC for A17 and M3 processors are at round 55% [a healthy level at this stage in N3 development], and TSMC seems to be on schedule to spice up yields by round 5+ factors every quarter.”
For the iPhone A17 chip, TSMC will do 82 masks layers with a die measurement seemingly within the 100-110 mm sq. vary, the Arete report mentioned. Meaning a yield of round 620 chips per wafer with a wafer cycle time of 4 months, the report added. M3 is more likely to be round 135-150 mm sq. die measurement and round 450 chips per wafer, in accordance with Arete.
“The main target now for TSMC via this early ramp is to optimize yield and wafer cycle-times to drive efficiencies,” Simpson mentioned.
TSMC has delayed the introduction and ramp of three nm on account of a must undertake multi-patterning with EUV lithography from device provider ASML, Hosseini mentioned.
“Whereas the excessive price of EUV multi-patterning has made the price/advantage of EUV unattractive, loosening the design guidelines to reduce the variety of EUV multi-patterning layers has led to a a lot larger die measurement,” Hosseini mentioned. The “actual” 3-nm node is not going to scale till a higher-throughput EUV system, ASML’s NXE:3800E, is obtainable throughout the second half of 2023, he added.
The NXE:3800E will assist enhance wafer throughput by about 30% over the present NXE:3600D by reducing the general price of EUV multi-patterning, in accordance with Hosseini.
TSMC will speed up adoption of the NXE:3800E within the first half of 2024 because the foundry scales N3E and different variations of the 3-nm node for extra clients, Hosseini mentioned within the report.
TSMC is getting assist from buyer Nvidia in lithography.
The “cuLitho” software program and {hardware} is shifting costly operations to Nvidia GPUs, which can assist TSMC deploy inverse lithography and deeper studying, in accordance with C.C. Wei.
“We not too long ago see TSMC partnered up with Nvidia, Synopsys and ASML on 2-nm manufacturing and past,” mentioned Brad Lin, analysis analyst at Financial institution of America. “TSMC is at present the one foundry inside that group.”
Holding the lead
TSMC expects its subsequent node, N2, will begin manufacturing in 2025.
“At N2, we’re observing a excessive degree of buyer curiosity and engagement,” Wei mentioned. “Our 2-nm expertise would be the most superior semiconductor expertise within the trade in each density and vitality effectivity when it’s launched and can additional lengthen our expertise management effectively into the long run.”
The present chip stock correction that’s sweeping the trade has been at the next degree than TSMC anticipated three months in the past and should lengthen into the third quarter this 12 months, the corporate mentioned. In consequence, TSMC now expects that its 2023 income could fall for the primary time in almost a decade. The corporate that’s a bellwether for the electronics trade forecasts that its gross sales could drop by as a lot as a mid-single–digit proportion level.
“We predict for different foundry gamers, gross sales might be down greater than this in ’23, with a muted second-half restoration the norm,” Simpson mentioned.
Regardless of the hunch, TSMC is sticking with the identical capital expenditure price range it had final 12 months, someplace within the vary of $32 billion to $36 billion. With its gear utilization down, TSMC is relying on a rebound in enterprise throughout the third quarter.
Utilization is a key indicator of profitability.
“We count on the blended utilization charge to trough within the second quarter of 2023 at round 66%, with the N7 utilization charge dipping under 50%,” Hosseini mentioned. “We count on utilization charges to indicate a rebound into the second half of 2023, pushed by new product ramps.”
