TSMC Confident It Can Beat Intel This Year With Advanced Technologies

A 300mm TSMC chip wafer on display at the 2020 World Semiconductor Conference in Nanjing, China. Image: Getty Images via Los Angeles Times

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The Taiwan Semiconductor Manufacturing Company (TSMC) expects that its latest semiconductor manufacturing technologies will be the best in the world once they are launched. TSMC is the world's largest contract chip manufacturer, as it is responsible for fulfilling the chip needs of several technology firms, such as Apple, Inc and Advancd Micro Devices, Inc (AMD). TSMC reported its earnings for the fourth quarter of and the full fiscal year 2022 earlier today in Taiwan, and at the event, the company's executives shared details for its future technologies and capital expenditures, both of which are hot topics in the semiconductor industry in the wake of the ongoing pandemic that has resulted in record demand for consumer electronics and other semiconductor-based devices.

TSMC Expects Chip Supply To Remain Tight During 2022 As Devices End Up Increasing Silicon Use

At the investor call, TSMC's chief executive officer Dr. C.C. Wei and its chief financial officer Mr. Wendell Huang shared details for its capital expenditure, current outlook, demand for new technologies and future plans, among other areas. Mr. Huang started off by stating that for the current year, TSMC plans to spend between $40 billion and $44 billion in capital expenditure, confirming reports that had surfaced late last month. The CFO also explained that the bulk of this investment, ranging between 70% and 80% will be focused on what TSMC describes as advanced technology products. These cover the fab's 7-nanometer (nm), 5nm, 3nm and 2nm chip manufacturing processes.

Dr. Wei remained confident about his company's ability to compete in the leading-edge semiconductor manufacturing technology industry, and his comments imply that TSMC will have outpaced U.S. chip giant Intel Corporation in the sector once it launches the N3 technology family later this year.

These were made in his opening remarks, which were as follows:

N3 technology will use FinFET transistor structure to deliver best technology maturity, performance and cost for our customers. N3 technology development is on track. We have developed complete platform support for HPC and smartphone applications. N3 production will start in the second half of 2022. We continue to see a high level of customer engagement at N3 and expect more new tape-outs for N3 in the first year as compared with N5. N3 will further extend our N3 family, with enhanced performance, power and yield. We also observed a high level of customer engagement at N3E, and volume production is scheduled for one year after N3.

Our 3-nanometer technology will be the most advanced foundry technology in both PPE and transistor technologies when it is introduced. With our technology leadership and strong customer demand, we are confident that our N3 family will be another large and long lasting node for TSMC.

TSMC's revenue breakdown by manufacturing processes shows that the 5nm node more than doubled its contribution last year. Image: The Taiwan Semiconductor Manufacturing Company (TSMC) 4Q21 Management Report

The TSMC chief also shared his take on the current situation of the semiconductor market and how things will fare out for supply this year. His industry has been hit with historic demand throughout 2021, and there is a division of opinion in the financial world on whether chip shortages and supply constraints due to high demand will continue this year. However, he was careful to reserve comments on whether short term supply chain constraints would continue. These constraints have not only stretched his company's production capacity but also resulted in record revenue growth despite increasing economies of scale.

Dr. Wei summarized his and TSMC's outlook by stating that:

We expect 2022 to be another strong growth year for TSMC. For the full year of 2022, we forecast the overall semiconductor market, excluding memory to grow approximately 9%, while foundry industry growth is forecast to grow to 20%. For TSMC we are confident we can outperform the foundry revenue growth and grow between mid to high 20% in 2022 in USD terms. Our 2022 business will be fueled by strong demand for our industry leading device and specialty technologies where we see strong interest from all four growth platforms which are smartphone, HPC, IoT and automotive.

Entering 2022 we expect the supply chain to maintain a higher level of inventory as compared to the historic seasonal level, given the industry’s continued need to ensure supply security. While the short term imbalance may or may not persist, we continue to observe a structural increase in long term semiconductor demand underpinned by the industry mega trend of 5G and HPC related applications. We also observed a higher silicon content in many end to end devices, including automotive, PCs, servers, networking, and smartphones. As a result, we expect our capacity to remain tight throughout 2022, as we believe our technology leadership will enable TSMC to capture strong demand for our advanced and specialty technologies.

A water tanker for TSMC securing groundwater from Tainan, Taiwan for the fab's chip manufacturing last year. Image: Song Jiansheng/United Daily News

Later on, the TSMC chief reiterated that a higher silicon content in newer devices is a major driver for the high demand his company is facing. He also clarified in response to a question that the higher tapeouts for the N3 process technology family are primarily for the N3 node only, and not for both the N3 and N3E processes. The latter is an optimized platform expected to be introduced next year, as TSMC expects to focus on first-generation N3 volume production in the second half of this year.

The company's senior vice president of research and development, Dr. Yuh Jier Mii had outlined last year that tapeouts for the N3 process had doubled over the preceding N5 family. Tapeouts are one of the final stages in a chip design, and they involve companies submitting manufacturers their final designs prior to production.

In the aftermath of a recent fire at the production facilities of the Duch chip manufacturing equipment manufacturer ASML, Dr. Wei commented that N3 and other technology node production for this year remains unaffected. He went on to add that TSMC is ramping up production to meet customer demand for next year.

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