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After the Taiwan Semiconductor Manufacturing Company (TSMC) reported its earnings for the third fiscal quarter, the South Korean media is claiming that TSMC's crucial 3-nanometer manufacturing process is delayed. This, according to a report from Business Korea, has provided Samsung Foundry with an edge since the company kicked off 3-nanometer production earlier this year - an announcement that came with skepticism about the potential orders that Samsung might have received for the new technology.
The report cites comments made by TSMC management during the earnings call, in which they stated that 3-nanometer production is on track for volume production later this quarter. This, according to Business Korea, is an admission that the process has been delayed, as it cites earlier reports in the Taiwanese media to claim that TSMC had originally planned production in in the third quarter.
TSMC Chief Shares That Demand For 3-nanometer Process Is Outstripping Its Capacity
TSMC's earnings call revolved around a handful of issues, the most important of which was its capacity for manufacturing the 3-nanometer semiconductors, the demand for the advanced technology, and the inventory correction that is plaguing the chip industry.
However, before we get to these, Business Korea's report suggests that TSMC's statements which shared that 3-nanometer volume production is slated for the current quarter imply that production has in fact been delayed. Throughout the course of the last year and this year, TSMC's management has maintained that volume production will start in the second half of this year.
At the earnings call, TSMC's chief executive officer Dr. C.C. Wei shared that his firm will commence volume production for N3 (3-nanometer) this quarter and that the new process technology will bring in more revenue than its predecessor due to a larger customer base.
Dr. Wei also shared that the demand for N3 is exceeding his company's ability to supply the products and that the number of tape-outs for N3 and the succeeding N3E process is more than double the tape-outs for the 5-nanometer process during the latter's first and second year. Reiterating his confidence in the 3-nanometer process family, he stated that:
Despite the ongoing inventory correction, we observed a high level of customer engagement at both N3 and N3E with a number of tape-outs more than 2x than that of N5 in its first and second year. We are working closely with our tool supplier to address towards delivery challenges and prepare more 3-nanometer capacity to support our customers strong demand in 2023, 2024 and beyond. Our 3-nanometer technology will be the most advanced semiconductor technology in both PPA and transistor technology when it is introduced. We are confident that N3 family will be another large and long-lasting node for TSMC.
Additionally, the slowdown in the personal computing market that has decimated the revenues of players such as Intel, NVIDIA and AMD, will also affect TSMC's 7-nanometer and 6-nanometer capacity utilization. Dr. Wei believes that this slowdown will continue until the first quarter of next year, and a portion of his company's reduction of capital expenditures is due to this slowdown and the resulting capacity underutilization.
He also shared that the slowdown in PC demand took his customers by surprise and according to Dr. Wei, the forecasts provided to him even as early as the start of this year were still very high compared to the demand that materialized.
However, demand for data center and automotive products remains steady, and commenting on the inventory correction, the executive highlighted that:
And for the inventory correction in 2023, all we want to say is like that. We expect probably 2023, the semiconductor industry will likely to decline. But TSMC also is not immune, but we believe our technology position, strong portfolio in HPC and longer-term strategic relationship with customer will enable our business to be more resilient than the overall semiconductor industry. And that's why we say in 2023, still a growth year for TSMC and the overall industry probably will decline.
Finally, TSMC still plans to mass produce the 2-nanometer process in 2025, and both the technology development and customer interest in the process is similar to technologies such as the N3 and N5.
