A disadvantage of being the only relevant semiconductor manufacturing company in the world is that you will face overwhelming demand for your technologies, and that is exactly what TSMC is enduring. Thanks to robust demand from the likes of NVIDIA, Apple, Qualcomm, MediaTek, and others, analysts predict that the wafer maker’s 3nm production capacity will nearly reach its limit by next year. To counter this problem, TSMC is making adjustments to other manufacturing lines, but it is expected that the company will still experience a shortfall.
Some customers are paying TSMC up to 100 percent higher for their 3nm orders, even though these account for only 10 percent of the total capacity
As reported by Commercial Times, JPMorgan analysts state that TSMC is attempting to work around various hurdles to meet demand, such as converting existing production lines dedicated to 4nm. For instance, one facility will add around 25,000 monthly wafer units, while others are reserved for TSMC’s 2nm N2 and A16 nodes. Additionally, the idling N6 and N7 lines will be re-purposed for the 3nm back-end process, allowing the manufacturer to churn out between 5,000 and 10,000 wafer units.
Earlier, TSMC’s 3nm process was reported to be in the golden period of mass production, with monthly wafer production estimated to reach a whopping 160,000 units by the end of 2025. However, on this occasion, it is mentioned that TSMC can only reach between 140,000 and 145,000 units and that too, by the end of 2026, with NVIDIA reportedly requesting its supply chain partner to expand capacity to 160,000 monthly units. Despite wanting to boost production, the semiconductor behemoth’s problems are actually a blessing in disguise.
The report states that JPMorgan conducted a supply chain survey and found that to ensure delivery times, some customers have offered ‘hot run’ prices that are around 50 percent to 100 percent higher than regular orders, but only account for 10 percent of total capacity. This level of desperation allows TSMC’s gross margin to exceed 60 percent, and if that was not enough, price hikes of up to 10 percent are in tow, thanks to mounting demand. While the Taiwanese firm handles its 3nm problems, it also needs to focus on its 2nm process, with mass production expected to start by the end of 2025.
News Source: Commercial Times
About the author: Omar Sohail is a reporter and analyst for Wccftech's mobile section, specializing in the technology and business of the mobile industry. His expertise lies in the intricate hardware supply chain, covering developments in semiconductor manufacturing, chip lithography, and camera sensor technology.
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