AMD To Stick With TSMC For Majority Of 3nm Products Says JPMorgan

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U.S chip designer Advanced Micro Devices, Inc (AMD) is likely to stick with the Taiwan Semiconductor Manufacturing Company (TSMC) for its new products believes investment bank JPMorgan. AMD procures all of its latest central processing units (CPUs) and graphics processing units (GPUs) from the Taiwanese company, and as TSMC moves to newer technologies, supply chain rumors have suggested that AMD is interested in Korean giant Samsung's chip manufacturing capabilities.

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AMD and TSMC's partnership is a widely discussed topic in the semiconductor industry, as the former's chip designs coupled with the latter's advanced manufacturing technologies have enabled AMD to resurge in the processor and GPU market. With no fabrication facilities of its own, AMD is forced to pick out contract chip manufacturers to compete with its larger rival Intel Corporation.

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At this front, industry speculation has suggested that AMD and Qualcomm might be considering Samsung for their next generation chips. Right now, AMD's latest products should use TSMC's 5nm process, after Apple's processors took the lead this year. However, for the 3nm process, which is a generational upgrade over 5nm, AMD, according to rumors, might switch to Samsung, purportedly due to Apple and TSMC's strong relationship.

JPMorgan believes that while AMD will source some 3nm products from Samsung, TSMC will still be its primary manufacturing partner. The bank outlined this in a new research note sent out on Monday, which states that not only will AMD use Samsung for its Chromebook processors, but that even as 3nm becomes the dominant market player, the company will stick with TSMC.

The research report also outlines that GPU designer NVIDIA Corporation will make the jump to TSMC for its gaming GPUs next year. NVIDIA's current strategy involves the company using TSMC for its data center products and Samsung for its gaming products, and according to JPMorgan, this calculus will change slightly in 2022 as NVIDIA taps the Taiwanese fab for its high end gaming GPUs through the N5 process.

Samsung's optimism for its 3nm process, which comes as the company expects to ship the first products manufactured through the process in H1 2022, has generated interest in its ability to catch up to TSMC, which is the world's largest contract chip manufacturer. JPMorgan believes that TSMC's dominance through the N5 technologies, which sees it command approximately 90% of the market share for the node will continue with N3 (or 3nm), through which it will retain a market share standing between eight to ninety percent.

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The bank sticks with its estimate that TSMC can earn up to $100 billion in 2025 through high performance computing (HPC) products. This is a growing segment that is expected to beef up the fab's margins due to increased corporate spending over the next couple of years. A September JPMorgan report had outlined that HPC, when combined with TSMC's strong smartphone market share and other post fabrication technologies will result in the segment heavily contributing to the company's overall revenue.

Finally, the research also outlines that Intel will be TSMC's second largest 3nm customer in 2023, coming second presumably only to Apple. The 3nm process will enter production in the second half of next year and then continue to ramp output. Intel's share in the wafer output pie for 2023 is estimated to be at 20,000 wafers per month (wpm) and TSMC is expected to cross 40,000 wpm only in 2023 according to reports from Taiwan.

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.
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