TSMC’s Total 3nm Investment Will Equal At Least $23 Billion – Report

A cleanroom inside TSMC's 8-inch Fab 3; Credit: Taiwan Semiconductor Manufacturing Co.,

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With the coronavirus and oil price bickering spelling bad news for markets and manufacturing companies, reports related to Taiwanese fab TSMC's manufacturing processes and business plans are one of the few pieces of positive news coming from the East. TSMC's successful partnership with AMD and Apple has gained the company fame in the tech world, especially with Intel Corporation's production woes ending as slowly as possible.

TSMC is reporting that business is normal when it comes to 5nm bookings, with production slated to kick off early next month. The fab's major customers for its first run include Cupertino giant Apple Inc and Chinese smartphone manufacturer MediaTek Inc; both of which are focusing on 5G internet connectivity with their devices.

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As Apple and MediaTek take advantage of TSMC's first-generation 5nm process that should be geared for low-power usage, the fab and its high-performance partners will continue to develop designs for products with heavier requirements. Now, with Intel also being rumored to contract TSMC for fabricating graphics processing units on the 5nm and 3nm nodes, news about TSMC's investment in the latter of the two manufacturing processes is seeping out of Taiwan, falling in line with earlier reports.

TSMC 5nm Volume Production Set To Ramp In H1 2020 And Investment In 3nm Fabrication Facilities Expected To Reach $23 Billion By Project End

A fresh report from Taiwanese publication DigiTimes indicates that TSMC's continued investments in 5nm and 3nm semiconductor process nodes will help Taiwan's Southern Taiwan Science Park post yearly revenue growth at the end of 2020. The park posted approximately $24.3 billion in revenue last year, with investments in the two process nodes expected to increase this by roughly 7.6% this year.

The details of the report suggest that 5nm volume production will ramp up in the first half of this year, and at the same time, TSMC will also commence the construction of its 3nm plant. Previous reports have suggested that the company's facility for the node will cover 30 hectares of land, and today's investment figures are slightly up from what was rumored ($20 billion) in 2016.

Should reports of Intel's interest in TSMC's 5nm and 3nm process nodes for its graphics chips materialize, then TSMC will effectively have fabricated silicon for nearly all major players in the tech industry.

TSMC earned $34.6 billion in revenue last year. $9.3 billion of this was from 7nm process technologies.

Investment In 3nm Exceeds TSMC's Capital Expenditure For 2019

During the course of 2019, TSMC invested $9 billion in research in development as it validated 5nm designs and concluded risk production. Additionally, in order to expand its facilities, the company also spent $14.9 billion in capital expenditure. This was done to keep in line with the impending demand uptick for components to be used in 5G networking products, as the company should contend with orders from Apple, MediaTek and Qualcomm for the course of this year. Of the three, TSMC's 5nm process node will be used to fabricate 5G modems for Qualcomm and MediaTek only, since Apple will use the former's product in the iPhone for a couple of years.

Additionally, it has also been reported in the past that roughly half of TSMC's capital expenditure for this year will be for 5nm-based facilities. At the time, the total capital expenditure figure was expected to be in the $14 billion - $15 billion range. TSMC's management raised both ends of this estimate by $1 billion in mid-January, and putting two and two together leads to the conclusion that in 2020, the Taiwanese fab will spend at least $7 billion for 5nm process technologies.

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It has already spent $120 million to ramp up 5nm, and management confirms that while 5nm tape-outs are fewer than those made for 7nm at a similar stage, they will exceed the older process once volume production kicks off. The advanced manufacturing process that will power high-end mobile gadgets this year and the next is expected to contribute 10% to TSMC's 2020 revenue, and reports of Intel looking to utilize the company's resources have created concerns for overbooking at TSMC's end that might end up affecting non-GPU products.

For the month of February, TSMC reported a 53.4% year-over-year revenue increase as it earned NT$93 billion through net sales.

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