2024
11/13
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Major semiconductor manufacturing company TSMC is expected to achieve 100% utilization on its cutting-edge 5 nanometer (nm) and 3 nm process production lines. Demand for AI chips from NVIDIA and mobile processors from Apple and MediaTek are driving this record production level.
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5nm process demand trends and production plans
TSMC’s 5nm process production line is expected to reach an unprecedented level of operation rate of 101% in the first half of 2024. A key driver of this record operating rate is demand for NVIDIA’s AI chips. Of particular note, NVIDIA plans to ship 200,000 Blackwell B200 series AI GPUs by the end of 2023, and to meet this large-scale demand, TSMC will prioritize production lines for the company. It is a fact that
In order to respond to this rapid increase in demand, TSMC is actively expanding its production capacity. The core of this will be the Arizona factory, which is scheduled to start operations at the end of 2024. The operation of this new factory is expected to strengthen the supply system for the North American market and significantly expand the company’s 5nm process production capacity.
3nm process market development
The 3nm process is rapidly gaining popularity, especially in the smartphone chip market. TSMC has revised Apple’s production volume for iPhone downwards by approximately 10% for the first quarter of 2024, but due to increased demand for chips for MediaTek’s flagship model, TSMC has decided to minimize the impact on production line utilization rate. successful.
A notable market trend is the limitations of Samsung’s own manufacturing lines. In 2024, there will be an estimated 15% shortage in the production of chips for Samsung’s smartphones, creating a huge market opportunity for MediaTek. The superiority of TSMC’s 3nm process technology is expected to further strengthen its dominance in the smartphone processor market in 2024.
TSMC is leveraging its technological advantages to optimize its production capacity by converting part of its 5nm process line to 3nm process production. This strategy makes it possible to effectively increase supply capacity for the 3nm process, which is in increasing demand.
Collaboration with advanced packaging technology
In the rollout of the 3nm process, the expansion of production capacity for advanced packaging technology CoWoS is also playing an important role. TSMC is planning to expand its monthly production capacity to 36,000 wafers by the end of 2023 and 90,000 wafers by the end of 2024, with a particularly large increase in capacity planned for the fourth quarter of 2024. With the operation of the new factory in the Southern Scientific and Industrial Park, current packaging capacity constraints are expected to be eased.
In addition, NVIDIA plans to begin manufacturing chips for Blackwell AI servers using the 3nm process. Production of the B300/B300A series using the 4nm process will begin in the third quarter of 2024, and the plan is to apply the advanced packaging technologies of CoWoS-L and CoWoS-S, respectively.
In this way, TSMC’s 3nm process is being adopted in a wide range of products, from smartphones to AI chips, and is a factor that further strengthens the company’s technological superiority in semiconductor manufacturing.
Xenospectrum’s Take
It is becoming clear that TSMC is in a position to dominate. While competitors such as Intel and Samsung are struggling to improve the yield of their manufacturing processes, TSMC has established overwhelming technological superiority with its cutting-edge processes. However, this almost monopolistic market dominance highlights the geopolitical risks of the semiconductor supply chain.
Ironically, TSMC’s “success” may symbolize the “failure” of the global semiconductor industry. The existence of multiple competitive manufacturers is essential for healthy market development, but a reality that is far from ideal is emerging.
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