This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
The Taiwan Semiconductor Manufacturing Company (TSMC) has increased the shipments of its 5-nanometer (nm) process technology family. This is the most advanced technology in TSMC's portfolio, with the fab looking to move forward to 3nm manufacturing later this year. Today's report comes courtesy of the Taiwanese publication DigiTimes, which claims that the output increase is to facilitate orders from several companies in the personal computing industry, particularly in the wake of reported yield problems that the Korean chipmaker Samsung Foundry is currently facing.
Samsung and TSMC are the only two companies in the world that offer third parties their chipmaking services, in a duopoly that has seen TSMC take a strong lead due to its consistently reliable deliveries and regular technology upgrades.
TSMC To Kick Off 3nm Chip Manufacturing With A Monthly Output Ranging Between 40,000 - 50,000 Wafers
The DigiTimes report is quite detailed and it shares that according to reports in the semiconductor industry, TSMC has increased its output of the 5nm process from an earlier 120,000 wafers per month to 150,000 wafers per month, to mark a 25% production increase. This increase has taken place due to orders from customers other than the consumer electronics firms Apple Inc and MediaTek.
TSMC's reported output increase for 5nm products comes after a rumor surfaced earlier this week stating that chip designer Advanced Micro Devices, Inc (AMD)'s Zen 4 desktop central processing lineup will enter mass production as early as this month. The Zen 4 processors reportedly use TSMC's 5nm manufacturing technologies and are expected to reach the market four to five months after production is finished.
Apart from the 5nm production ramp, DigiTimes also reports that customer interest in TSMC's 4nm process family is strong. The 4nm technologies are a variant of the 5nm node, and they are part of TSMC's N5 lineup.
Among the companies that have demonstrated interest in 4nm is another American semiconductor designer NVIDIA Corporation. Digitimes reports that NVIDIA has paid a heft amount to TSMC to reserve 4nm capacity, the bulk of which is expected to go to TSMC's strongest customer Apple.
Alongside NVIDIA, the San Diego, California chip firm Qualcomm Incorporated has also taken a keen interest in the 4nm technology. The pair's interest stems from yield problems at Samsung Foundry, and they are reportedly looking for alternatives as Samsung's chip manufacturing technologies fail to deliver adequate results. In the semiconductor industry, yield refers to the number of chips in a silicon wafer that are able to pass quality control tests. The higher the yield, the less a company has to pay a fab like TSMC or Samsung to procure the semiconductors.
Digitmes' sources also believe that in addition to the strong process yield, another reason that NVIDIA has made the shift is the Taiwanese fab's brand image. TSMC is widely credited by many observers as having enabled AMD to gain a manufacturing edge over its larger rival Intel Corporation, and NVIDIA it is believed is looking to cash in some of this goodwill. As opposed to AMD that has to rely on companies like TSMC for its manufacturing needs, Intel uses its own facilities, and the company has struggled to make them run at scale as of late.
Finally, TSMC's 3nm manufacturing process is still on target to enter production later this year. The variant to enter production is being referred to as 'N3B' and Digitims expects initial output to range between 40,000 to 50,000 wafers per month. N3B will be followed soon by an advanced variant dubbed N3E, which is expected to enter production next year.
