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  • Taiwan Targets Silicon Photonics to Cut AI Chip Power Use by 50 Percent

    Taiwan Targets Silicon Photonics to Cut AI Chip Power Use by 50 Percent

    Taiwan is mobilising its chipmaking sector to commercialise silicon photonics and copackaged optics, with the Ministry of Economic Affairs backing efforts to overcome artificial intelligence computing bottlenecks.

    The island holds over 90 percent of global manufacturing capacity for chips at 7 nanometers or below, while more than 30 firms including Taiwan Semiconductor Manufacturing Co and MediaTek Inc formed an industry alliance in 2024.

    Silicon photonics replaces conventional copper wiring between chips with optical signals. Because optical transmission generates negligible heat, the technology cuts device power consumption by 30 to 50 percent, according to the Ministry of Economic Affairs. That saving eases cooling limits in high-density AI data centres. It also clears the 1.6-terabit-per-second bandwidth ceiling that hampers electronic links.

    Optics Replace Copper Interconnects

    Heavy capital is pouring across the hardware supply chain. Nvidia invested US$4 billion into silicon photonics development in March. The chipmaker needs architectures that sustain real-time AI workloads and high-definition streaming without overheating server racks.

    Taiwanese authorities have folded the technology into their New 10 Major AI Infrastructure Projects. Funding flows through the government’s A+ Enterprise Innovation research programme. The scheme subsidises domestic research teams and equipment developers building local manufacturing tooling.

    Alliance Mobilises Heavyweights

    Execution on the ground rests on the Silicon Photonics Industry Alliance, a consortium established in 2024 with industry group SEMI. The group brings together more than 30 technology suppliers. Members include Taiwan Semiconductor Manufacturing Co, ASE Technology Holding, MediaTek and Hon Hai Precision Industry.

    Asian hardware vendors and server assemblers face shifting procurement cycles. Traditional printed circuit board layouts will yield to integrated optical packaging. As a result, component suppliers must retool production lines for optical transceivers and precision glass substrates.

    Manufacturing risks centre on packaging yields and costs. Integrating laser sources and optical waveguides directly alongside silicon dies requires packaging tolerances tighter than standard wire bonding. These yield hurdles could delay volume delivery.

    Race for Next-Generation Packaging

    Foundry and packaging operators have spent years researching optics to counter the slowdown of traditional transistor scaling. Physical node shrinking now delivers diminishing returns. Advanced packaging formats like copackaged optics have become the primary path to computing efficiency.

    Prototype lines are now running across alliance members to finalise copackaged optics standards before volume production begins for 2026 data centre hardware cycles.

  • Taiwan Pitches Global Chip Alliances as Market Heads for 1.5 Trillion Dollars

    Taiwan Pitches Global Chip Alliances as Market Heads for 1.5 Trillion Dollars

    Taiwan President William Lai told tech executives in Taipei that international chip partnerships will anchor an industry projected to exceed 1.5 trillion dollars this year.

    Foreign semiconductor leaders continue to pour capital into the island, led by Nvidia’s annual procurement and investment topping NT$3 trillion ($94.84 billion). Micron Technology has committed more than NT$1.4 trillion to local operations, while Advanced Micro Devices pushed its research spending in Taiwan past NT$300 billion.

    TSMC’s Overseas Buildout

    Taiwan Semiconductor Manufacturing Co is matching domestic research with heavy spending abroad to insulate buyers against supply shocks. The world’s largest contract chipmaker announced an additional $100 billion commitment to its Arizona facilities in July, while its plant in Kumamoto, Japan, continues on schedule.

    In Europe, TSMC expects its Dresden fabrication facility to begin commercial chip production before the end of next year. That site will supply automotive and industrial customers across the European Union.

    For consumer electronics makers and device brands across Asia, the dual strategy offers reassurance. Taiwan is retaining cutting-edge wafer fabrication and packaging on home soil while duplicating mature and specialized capacity in Western markets to guarantee steady silicon delivery during regional crises.

    State Support for Next-Gen Tech

    Taipei plans to back corporate spending by funding core infrastructure, including power generation, water supplies, land access, and computing capacity. State research backing will focus on silicon photonics, quantum computing, and artificial intelligence robotics.

    US Undersecretary of State for Economic Affairs Jacob Helberg told attendees via video link that concentration without resilience creates systemic vulnerabilities. He pointed to the Pax Silica framework, an alliance designed to secure technology supply lines among trusted trade partners.

    Discussions continue this week as the Semicon Taiwan trade exhibition runs through Friday at the Taipei Nangang Exhibition Center.

  • TSMC Agrees to Produce Three 3Nm Chips for Xiaomi

    TSMC Agrees to Produce Three 3Nm Chips for Xiaomi

    Taiwan Semiconductor Manufacturing agreed to produce three custom chips for Xiaomi, including a next-generation three-nanometre smartphone processor starting in 2026.

    The contract ties the $2.0 trillion Taiwanese foundry directly into the Chinese brand’s hardware expansion across flagship handsets, smart devices and automotive platforms. Xiaomi plans to deploy the primary 3nm design, designated the Xring O3, in its premium smartphones before rolling out two companion processors for consumer artificial intelligence devices and autonomous vehicle controls.

    Expanding beyond data centres

    Adding Xiaomi diversifies TSMC’s advanced-node order book at a time when top-tier 3nm wafer allocation has remained heavily concentrated among Western computing and mobile clients. Handset manufacturers in Asia have spent three years attempting to bring proprietary silicon in-house to reduce their dependence on merchant chipmakers. Xiaomi’s commitment to custom designs manufactured on TSMC’s cutting-edge lithography mirrors earlier silicon strategies from rival hardware makers, though extending those designs into vehicle autonomy widens the operational scope.

    For consumer tech brands in Asia, controlling chip architecture allows tighter software integration across connected ecosystems, from living-room appliances to electric sedans. The arrangement secures advanced fabrication capacity for Xiaomi while providing TSMC with volume demand outside its core server and cloud computing base.

    Wafer volume targets

    Initial commercial success hinges on the manufacturing yield and delivery pace of the Xring O3 line during 2026. Market performance will depend on the speed at which Xiaomi ramps retail shipments of its 3nm handsets and incorporates the subsequent automotive silicon into its production vehicles.

  • Asian Tech Giants Taiwan and South Korea Form AI Hardware Alliance Amid Surging Demand

    Asian Tech Giants Taiwan and South Korea Form AI Hardware Alliance Amid Surging Demand

    Long-standing technological competitors Taiwan and South Korea are joining forces to address the booming global demand for AI accelerators, the specialized hardware critical for training generative AI models. This alliance marks a significant shift from decades of intense rivalry to a necessary partnership in the digital age.

    The insatiable demand from tech giants for computing power has strained the capacity of key accelerator suppliers like Nvidia and AMD. Their products rely on an increasingly interconnected supply chain linking Taiwan and South Korea, making cooperation essential to meet the massive market need.

    Nvidia CEO Jensen Huang highlighted the urgency at Computex 2026 in Taipei, personally requesting more memory wafers from South Korean firm SK Hynix. This collaboration underscores that no single country can satisfy the current scale of AI infrastructure expansion alone.

    From Intense Competition to Interdependence

    For decades, South Korea and Taiwan fiercely competed for supremacy in technologies ranging from televisions and smartphones to memory chips. Both nations, former Japanese colonies, built their economies on exports, initially focusing on labor-intensive goods before advancing to electronics. This rivalry saw Taiwanese brands like Acer and Asus compete against South Korean giants Samsung and LG.

    South Korea often pulled ahead due to the integrated structure of its conglomerates, such as Samsung, which controlled multiple stages of the supply chain. A notable example involved Samsung reportedly aiming to dominate industries where Taiwanese firms competed, though Samsung denied such a specific ‘Kill Taiwan’ strategy.

    Taiwan’s strength, however, lay in its highly specialized contract manufacturing ecosystem. Unlike South Korea’s vertically integrated companies, Taiwan developed a dense network of firms each focusing on a narrow part of the manufacturing process. This specialization allowed for greater flexibility and adaptability, enabling enduring partnerships with global tech firms like Apple, which eventually made Taiwan Semiconductor Manufacturing Company (TSMC) its primary chip supplier over Samsung.

    Taiwan’s AI Hardware Dominance and Future Outlook

    In the current AI era, Taiwan’s multifaceted ecosystem has proven highly advantageous. Taiwanese companies now hold dominant positions in crucial niches, from power supplies to chip packaging and advanced cooling systems. This allows global customers to select and combine suppliers, maintaining production flexibility. Nomura’s May report ranked Taiwan first globally in AI hardware production, with its AI-related exports contributing to a 15-year high economic growth of 8.7% last year.

    This economic divergence saw Taiwan surpass South Korea in GDP per capita in 2025 for the first time in over two decades. However, this has not deepened the rivalry; instead, the AI boom has fostered greater interdependence. South Korea excels in High Bandwidth Memory (HBM), with SK Hynix and Samsung together accounting for approximately 80% of global HBM production. These critical memory components are then integrated with computing chips from Taiwan’s TSMC using advanced packaging techniques, a final step in creating AI accelerators.

    This dynamic has resulted in South Korea achieving a record trade surplus with Taiwan last year. The relationship is best described as a ‘frenemy’ dynamic, driven by the sheer scale of AI demand. Despite lingering competitive sentiments, the complementary strengths of Taiwan’s contract chipmaking dominance and South Korea’s memory market stronghold make them indispensable partners in powering the next wave of artificial intelligence.

  • Taiwan Semiconductor Manufacturing Emerges as Clearer Investment Choice over SoundHound AI

    Taiwan Semiconductor Manufacturing Emerges as Clearer Investment Choice over SoundHound AI

    Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has been identified as a significantly stronger investment choice compared to conversational AI firm SoundHound AI for the year 2026. This assessment, rooted in a comprehensive financial and operational comparison, positions TSMC as a robust foundation for the global technology ecosystem, including critical support for Asia’s burgeoning retail and consumer technology sectors.

    TSMC’s Dominance and Financial Strength

    TSMC’s financial performance in fiscal year 2025 demonstrated remarkable strength, with revenues soaring to approximately $120.3 billion, a 33% increase from the previous year. The company recorded a net income of about $54.3 billion, yielding a net margin of 45.1%. This profitability is bolstered by its role as a dedicated foundry, manufacturing advanced chips that power everything from high-performance computing to smartphones. As of December 2025, TSMC maintained a low debt-to-equity ratio of 0.2x and a healthy current ratio of 2.5x, indicating strong financial stability. Free cash flow for the year reached approximately $34.3 billion, underscoring its operational efficiency and ability to fund ongoing expansion. This makes TSMC a cornerstone for Asian electronics manufacturing and by extension, the retail chains dependent on these devices.

    The company’s strategic importance extends to its global manufacturing footprint, with facilities across Taiwan, China, and the United States, serving over 500 customers. Its advanced chip production is essential for the AI industry, with high-performance computing now accounting for nearly two-thirds of its total revenue. TSMC’s continuous investment in cutting-edge fabrication technologies, despite annual billions spent on new factories, is crucial for maintaining its market leadership against rivals like Intel and Samsung. For Asian markets, this ensures a reliable supply chain for next-generation consumer electronics and enterprise solutions.

    SoundHound AI’s Growth Amidst Challenges

    In contrast, SoundHound AI, while showing rapid growth, faces a more challenging path. The company, which provides specialized voice software for sectors like automotive, retail, and hospitality, reported revenues of nearly $168.9 million in FY 2025, a growth rate of 99.4%. However, this growth came with a net loss of approximately $14.0 million, resulting in a negative 8.3% net margin. The company’s strategy involves aggressive growth through acquisitions, such as LivePerson and Amelia, which can introduce integration complexities and higher costs. Its balance sheet as of December 2025 showed a debt-to-equity ratio of 0.0x and a current ratio of 4.6x, but free cash flow remained negative at $103.1 million.

    SoundHound AI operates in a highly competitive landscape against larger technology firms like Microsoft and Alphabet, which possess significant resources. The company has also contended with internal control weaknesses and ongoing legal challenges. While its agentic AI software finds traction with partners like Casey’s convenience stores and MUSC Health, its financial scale and profitability remain far behind TSMC. For retail and hospitality businesses in Asia considering voice AI solutions, the long-term stability and competitive resilience of providers like SoundHound AI become key considerations.

    RetailNews Asia notes that while the allure of high-growth tech firms like SoundHound AI can be strong, the foundational importance and robust financial health of companies like TSMC offer a more predictable, albeit less explosive, investment outlook for those backing the region’s vast consumer tech ecosystem. Similar to how other regional manufacturing giants provide stability, TSMC’s role is critical for the continuous innovation seen across Asian retail and technology.

  • TSMC’s AI Chip Capacity Challenges Offer Samsung A Pricing Advantage

    TSMC’s AI Chip Capacity Challenges Offer Samsung A Pricing Advantage

    Taiwan Semiconductor Manufacturing Company (TSMC), a global leader in chip manufacturing, is reportedly struggling with production constraints for its advanced AI chips. These bottlenecks are primarily linked to the intricate Chip-on-Wafer-on-Substrate (CoWoS) packaging technology, which is critical for high-performance computing components used in artificial intelligence.

    This production challenge at TSMC presents a strategic advantage for its main competitor, Samsung. With demand for AI chips surging and TSMC’s capacity limited, Samsung finds itself in a stronger position to negotiate higher prices for its competing memory products, particularly High Bandwidth Memory (HBM). HBM is a vital component often bundled with AI chips.

    Market Dynamics and Pricing Power

    The current situation highlights the intense competition and intricate supply chain dynamics within the semiconductor industry. As AI development accelerates, the ability to produce these complex chips and their associated components at scale becomes a major determinant of market leadership. TSMC’s temporary hurdles with CoWoS packaging could give Samsung a window to capture a larger share of the lucrative AI hardware market, at potentially more favourable pricing. This rivalry extends beyond just the foundry business into memory and packaging, where both companies are significant players.

    Implications for Asia’s Electronics Supply Chain

    For Asia’s electronics and consumer tech sectors, this dynamic is crucial. Many consumer devices, from smartphones to smart home hubs, increasingly rely on AI capabilities, which in turn depend on advanced chips and memory. A shift in pricing power or supply availability from major manufacturers like TSMC and Samsung can ripple through the entire supply chain, affecting component costs and product development timelines for brands across the region. RetailNews Asia tracks how such foundational shifts in manufacturing impact the availability and pricing of critical components for major electronics brands and, ultimately, the consumer market.

  • Samsung Foundry drops further behind TSMC after disasterous Q4

    Samsung Foundry drops further behind TSMC after disasterous Q4

    TSMC is the largest contract chip foundry in the world. Looking at its roll call of customers, you can see why it is number one. After all, the Taiwan-based foundry manufactures chips based on designs submitted by companies such as Apple, Nvidia, AMD, MediaTek, Qualcomm, and Broadcom. Data compiled by TrendForce that The Chosun Daily published says that during the fourth quarter of 2024, TSMC’s market share rose 2.4 percentage points to 67.1%.
    That means approximately two out of every three chips produced during the last three months of the year were built by TSMC. As for second-place Samsung Foundry, its market share dropped 1 full percentage point from 9.1% to 8.1% during the same quarter. Sammy’s foundry has had to deal with poor yields on its advanced chips, which this year resulted in the use of Qualcomm’s Snapdragon 8 Elite for Galaxy application processor (AP) on every Galaxy S25 series unit.
    A repeat could be in store for next year’s Galaxy S26 line unless Samsung Foundry can hike its yield on 2nm production from the current 30% before mass production of the Exynos 2600 AP begins. If there is enough of an improvement, the Exynos 2600 SoC will power the Galaxy S26 and Galaxy S26+ in all markets except for the U.S., China, and Canada.
    But we digress. The gap in market share between TSMC and Samsung Foundry increased sequentially from 55.6% in Q3 to 59% in Q4. TrendForce says that TSMC is benefiting from the AI buzz as demand for Nvidia’s GPU chips used for AI training, inference (predictions and decisions), and computing picks up. Those chips are made by TSMC.
    Also helping TSMC is the demand for high-end smartphone chips including those used to power the iPhone, and Samsung’s flagship Galaxy S and foldable Galaxy Z models. Starting this year the new Tensor G5 AP, designed by Google from the ground up, will be built by TSMC using its third-generation 3nm node (N3P) and deployed in the Pixel 10 line. That is the same node that TSMC will use to build Qualcomm’s Snapdragon 8 Elite 2 for next year’s Galaxy S26 Ultra.
    You might be wondering which foundry is in third place behind Samsung Foundry. That would be China’s largest foundry, SMIC. While the latter appears to be handling the production of Huawei’s APs, it also could be making some money building Huawei’s Ascend AI accelerators. Long-time PhoneArena readers probably are aware that thanks to U.S. sanctions, SMIC cannot purchase extreme ultraviolet lithography machines preventing SMIC from building chips using a process node more advanced than 7nm.
    TSMC generated $26.85 billion in revenue during Q4 2024, a gain of 14.1% year-over-year. Samsung Foundry’s Q4 revenue declined 1.4% to $3.26 billion.
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  • Apple chip builder TSMC not yet ready to move to next-gen lithography system

    Apple chip builder TSMC not yet ready to move to next-gen lithography system

    Back in December, Dutch tech giant ASML shipped its first High-NA Extreme Ultraviolet (EUV) lithography machine (EXE:5000) to Intel. The $400 million machine will take us to the next tier of chip production with a process node of 2nm and less. The original EUV machines, also made by ASML, were necessary to get chip foundries to manufacture components under 10nm. A lower process node means smaller transistors, meaning more can fit inside a chip. The higher a chip’s transistor count, the more powerful and/or energy efficient it is.

    The reason that the EUV machine is so important is that it prints circuitry patterns on silicon wafers that are thinner than human hair. This is required when you are building a chip with billions of transistors inside. The 7nm A13 Bionic SoC, used to power 2019’s iPhone 11 series, contained 8.5 billion transistors. The 3nm A17 Pro used to run the iPhone 15 Pro and iPhone 15 Pro Max sports 19 billion transistors.

    The 8 nm resolution of the EXE:5000 means that chipmakers can pack more transistors into a single chip. Smaller transistors are more energy efficient – that means the chips will be able to do more with less.-ASML

    The new High-NA EUV machine has a 0.55 numerical aperture (NA) lens giving it a resolution of 8nm compared to the current machines’ resolution of 13nm (.33 NA). This means that the new machines can print transistors 1.7 times smaller resulting in transistor densities 2.9 times larger with a single exposure. The result? More powerful or energy-efficient chips. The new machines can also print 185 wafers per hour, rising to 220 by 2025. That compares to the 160 wafers per hour that can be printed with the current EUV machines.

    The current Low-NA EUV machines can produce the same resolution but only after two exposures are made using double patterning. However, there are risks with double patterning including longer production times, and increased risk that a defect will occur. It can also lead to performance variability among manufactured chips.

    ASML is quick to tell you what can go wrong with double patterning since it would prefer foundries spend the bigger bucks on the newer machines. But TSMC’s N3B process node, which supposedly relies on double patterning, was used to manufacture the A17 Pro application processor used on all of those iPhone 15 Pro and iPhone 15 Pro Max units made by Apple, and the M3 chip used to power high-end Macs. ASML says that its clients are just now doing their research into the High-NA EUV.

    Financial institution China Renaissance (via

    Eventually, TSMC, Samsung Foundry, and others will have to join Intel and start making the investments needed to move to the High-NA EUV. That time might end up being soon with TSMC and Samsung looking to start 2nm production in 2025 moving to 1.4nm production in 2027.

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  • TSMC shows off 2nm chip prototype to Apple

    TSMC shows off 2nm chip prototype to Apple

    TSMC is the largest foundry in the world and Apple is its biggest customer. Apple was able to reserve most of TSMC’s initial 3nm production for the A17 Pro chipset which is being used to power the iPhone 15 Pro and iPhone 15 Pro Max. To keep things simple, just remember that as the process node number gets lower, the transistors used by a chip get smaller in size which means that more of them can fit into the small space inside an SoC. The higher a chip’s transistor count, the more powerful and/or energy-efficient it is.

    Looking at the iPhone as an example, the iPhone 11 series was powered by the 7nm A13 Bionic which carried 8.5 billion transistors. The 3nm A17 Pro has 19 billion transistors. And since it takes a few years to build the fabs and order the machinery needed, we’ve known for some time that TSMC is working toward 2nm chip production. Apple has already had a chance to check out 2nm prototypes built on TSMC’s N2 node. The report noted that another huge TSMC customer, NVIDIA, also was able to view the 2nm prototype chip.

    TSMC previously said that it would start 2nm volume production in 2025 and in a statement to The Financial Times, the company said that it is “progressing well and on track for volume production in 2025, and will be the most advanced semiconductor technology in the industry in both density and energy efficiency when it is introduced.” Assuming that there are no delays, the iPhone 17 Pro and iPhone 17 Pro Max could be the first Apple handsets to be powered by a 2nm application processor (AP), possibly the A19 Pro.

    At 2nm, TSMC will debut its new Gate-all-around (GAA) transistors which cover the channel on all four sides reducing current leaks and delivering gains in power efficiency. Samsung Foundry already uses GAA with its 3nm production.

    Speaking of Samsung Foundry, the latest word is that Qualcomm will be switching from TSMC to Samsung to produce the 3nm Snapdragon 8 Gen 5 AP in 2025. Qualcomm left Samsung Foundry in 2022 after the latter reported low yields building the Snapdragon 8 Gen 1. TSMC took over to produce the Snapdragon 8+ Gen 1 and has had the business ever since, although that seems likely to change in 2025. Samsung Foundry’s yield is about 60% for the most basic of 3nm production. The yield is expected to drop when building APs for smartphone.

    At a 60% yield, 40 out of every 100 dies cut from a wafer fails to meet quality control. And since the foundry’s customers are usually responsible for the cost, yield is a major factor when determining which foundry a chip designer does business with.

    Samsung says that it is ready for 2nm production. “We are well-equipped to set up for SF2 mass production by 2025,” Samsung said. “Since we were the first to take the leap and transition to GAA architecture, we are hoping the progress from SF3 to SF2 will be relatively seamless.” While Apple and NVIDIA were able to get a look at their future, TSMC is putting together the final list of its 3nm and 2nm clients according to DigiTimes.

    Intel is also looking to grab some contract business away from TSMC and Samsung Foundry. Intel’s next-gen 18A node (1.8nm) could take process leadership away from the pair and it is offering chip design firms free test production. Intel could shake up the market. Longtime TSMC customer AMD said in July that it would “consider other manufacturing capabilities.”

    Leslie Wu, chief executive of consulting firm RHCC, said that companies looking to manufacture their chip designs using a 2nm node might start having their chip production spread across multiple foundries. With the concern about China invading Taiwan always something to worry about, Wu said, “It’s too risky to rely on TSMC solely.” Yet Apple has been relying solely on TSMC for years.

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  • Intel gets confidence boost from anonymous customer pre-paying for 18A production

    Intel gets confidence boost from anonymous customer pre-paying for 18A production

    Last week, Intel CEO Pat Gelsinger reiterated his goal for Intel to take foundry leadership from TSMC by 2025. The executive said, “We’re 2.5 years into the transformation. Now, it’s gone the way I would have expected at the time in terms of rebuilding the company. You have to be much less skeptical about our ability to pull this off.” Intel not only had to watch as TSMC took its foundry leadership away, but it also saw TSMC’s largest customer, Apple, replace its Intel chips with M-series chips built by TSMC.
    During last week’s Deutsche Bank conference, Gelsinger stated that the 18A node will return process leadership to Intel. That node would be considered 1.8nm while TSMC and Samsung would be shipping at 2nm during the same time. The CEO also let it be known that Intel has received a large prepayment from a customer for Intel’s 18A capacity. This gives Intel the confidence to believe it is on the right track and will lead the company to speed up the build-out of 18A fabs.
    In the long term, Intel sees the contract foundry business as its biggest opportunity. One interesting comment made by Gelsinger is that Intel knows TSMC’s wafer costs, ASPs, and targets. With this knowledge, he says that Intel wants lower costs than TSMC to win business from the global foundry leader. He says that Intel is trying to get its internal cost structure in line with TSMC. To this end, Intel will study its metrics such as headcount per wafer start, and use more AI/Machine Learning to improve efficiency.
    Intel is still relying on TSMC to build parts of its next-generation ‘Meteor Lake’ chips. While Intel will use its Intel 4 node (7nm) to build the chip’s CPU tile, the GPU tile will use TSMC’s 5nm node. The chip’s SoC tile, an ultra-low-power tile that supports media, imaging, display, and the connection to memory, will be built on TSMC’s 6nm node as will the chip’s I/O Extender tile.
    As Tech journalist Leo Waldock notes in a post on X, “All that could be correct yet it still seems weird to me that Intel is buying tiles from TSMC for its own products while touting foundry services to 3rd parties. Eat your own dog food, no?”
    Will Intel make TSMC and Samsung Foundry squirm? Will Apple stay loyal to TSMC? Will geopolitical rumblings make TSMC customers worried enough to bring their business to another foundry? These are questions that we will have to wait to answer.
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  • Apple paying TSMC special rate for 3nm A17 Bionic

    Apple paying TSMC special rate for 3nm A17 Bionic

    TSMC’s yield rate on its 3nm production is said to be at 55%. At that rate, a bit less than half of the silicon wafers used to produce Apple’s A17 Bionic and M3 chips are frisbees or extra-large drink coasters. Remember, the iPhone 15 Pro and iPhone 15 Pro Max will be the only smartphones powered by a 3nm chipset this year due to the high price of the wafers.
    But Apple reportedly has worked out a deal with TSMC and will pay only for known good die rather than the $17,000 per wafer price. But Brett Simpson, senior analyst at Arete Research, provided EE Times with a report in which he said that once yields get to 70%, TSMC will put its most lucrative client back on standard wafer prices.
    Simpson wrote, “We think TSMC will move to normal wafer-based pricing on N3 with Apple during the first half of 2024, at around $16-17K average selling prices. At present, we believe N3 yields at TSMC for A17 and M3 processors are at around 55% [a healthy level at this stage in N3 development], and TSMC looks on schedule to boost yields by around 5+ points each quarter.”
    The report from Arete Research says that the A17 Bionic requires 82 mask layers and with a die size in the range of 100-110 square mm, each wafer can yield 620 chips with a wafer cycle time of four months. That’s the time it takes a wafer lot (usually 25 wafers) to move from start to finish in a fab. The report added that the M3 chip is likely to be around 135-150 mm square die size and yield up to 450 chips per wafer.

    The first generation 3nm chips from the foundry are using the N3B process node for the A17 Bionic. In 2024, Apple might switch to the N3E node for the A17 Bionic which will have lower production costs and higher yields. The only downside, according to one tipster, is that it supposedly delivers less of a performance increase than the N3B node delivers.

    This is a rumor, but even so, it isn’t clear whether Apple would stick with the N3B node to manufacture the A17 Bionic and M3, or switch to the less-expensive but slightly less impressive N3E node. If Apple decides to go with the N3E node, you might see prospective iPhone 15 Pro and iPhone 15 Pro Max buyers trying to figure out which variant of the A17 Bionic SoC is inside the phone they are about to buy.
    TSMC CEO C.C. Wei said during a conference call with analysts, “Our 3-nm technology is the first in the semiconductor industry to high-volume production with good yield. As our customers’ demand for N3 (3nm) exceeds our ability to supply, we expect N3 to be fully utilized in 2023, supported by both HPC and smartphone applications. Sizable N3 revenue contribution is expected to start in the third quarter, and N3 will contribute a mid-single–digit percentage of our total wafer revenue in 2023.”

    TSMC will start 2nm production in 2025

    Mehdi Hosseini, senior equity research analyst with Susquehanna International Group, says that in the battle between TSMC and Samsung Foundry, TSMC remains on top. “TSMC, in our view, remains the preferred foundry choice for leading-edge nodes as Samsung Foundry has yet to demonstrate a stable leading-edge process technology, all while IFS [Intel Foundry Services] is years away from offering a competitive solution,” he wrote.
    In the foundry business, you don’t get a second to look back at your accomplishments. TSMC says that N2 production will start in 2025. TSMC’s Wei states, “At N2, we are observing a high level of customer interest and engagement. Our 2-nm technology will be the most advanced semiconductor technology in the industry in both density and energy efficiency when it is introduced and will further extend our technology leadership well into the future.”
    The recent chip inventory correction has been worse than TSMC expected and the company said that it might report a drop in annual revenue (for 2023) which would be the first drop in a decade. The average inventory holdings for TSMC’s fabless clients (chip designers that don’t own a factory and turn to TSMC to make their chips) is 92 days. During Q4 of 2022, Nvidia had over 200 days of inventory with Marvell around 180 days and Qualcomm with about 160 days of inventory.
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  • TSMC’s current 3nm chip production not enough to satisfy Apple’s needs

    TSMC’s current 3nm chip production not enough to satisfy Apple’s needs

    The world’s leading foundry, TSMC, is having problems meeting the demand for 3nm chips from Apple. The latter is TSMC’s largest customer, accounting for 25% of its revenue. Apple reportedly locked up all of TSMC’s 3nm production for this year and plans on debuting the 3nm A17 Bionic chipsets with the iPhone 15 Pro and iPhone 15 Ultra.
    The smaller the process node, the smaller the chip’s feature set, including transistors. Smaller transistors mean that more can fit inside a chip, which is important because the higher its transistor count, the more powerful and energy-efficient it is. For example, the Apple iPhone 11 line was released in 2019 and was powered by the 7nm A13 Bionic which contained 8.5 billion transistors in each chip. Last year’s iPhone 14 Pro models were powered by the 4nm A16 Bionic SoC with a transistor count of 16 billion.
    The aforementioned A17 Bionic that will power Apple’s premium iPhone 15 models this year will be made on the 3nm node and could include more than 20 billion transistors. The iPhone 15 Pro and iPhone 15 Ultra could be the only two phones from a major brand to use a 3nm chip under the hood this year. One reason is cost. With the price for each silicon wafer used for 3nm chip production tagged at approximately $20,000, moving to 3nm this year is an expensive proposition, especially with yields still improving.
    As TSMC and Samsung jockey for 3nm leadership, TSMC CEO C.C. Wei recently spoke to analysts during a conference call and said, “Our 3-nm technology is the first in the semiconductor industry to high-volume production with good yield. As our customers’ demand for N3 (TSMC’s 3nm production) exceeds our ability to supply, we expect N3 to be fully utilized in 2023, supported by both HPC (High-Performance Computing) and smartphone applications.”
    The executive added, “Sizable N3 revenue contribution is expected to start in the third quarter, and N3 will contribute a mid-single–digit percentage of our total wafer revenue in 2023.” The sizable N3 revenue contribution Wei sees in Q3 has to do with the release of the 2023 premium iPhone models.
    While TSMC and Samsung are the top two chip foundries in the world, Intel has joined the fight and promises to regain process node leadership in 2025. Right now, that crown belongs to TSMC. Mehdi Hosseini, senior equity research analyst with Susquehanna International Group says, “TSMC, in our view, remains the preferred foundry choice for leading-edge nodes as Samsung Foundry has yet to demonstrate a stable leading-edge process technology, all while IFS is years away from offering a competitive solution.”
    Besides the A17 Bionic, TSMC will also produce Apple’s M3 chip using the 3nm node. Brett Simpson, senior analyst at Arete Research, said in a report provided to EE Times, “We think TSMC will move to normal wafer-based pricing on N3 with Apple during the first half of 2024, at around $16-17K average selling prices. At present, we believe N3 yields at TSMC for A17 and M3 processors are at around 55% [a healthy level at this stage in N3 development], and TSMC looks on schedule to boost yields by around 5+ points each quarter.”
    As is the case in the chip industry, there is no time to rest because you always have to look ahead. With 3nm heading for the iPhone this year, 2nm production will start in 2025. TSMC CEO Weil says, “At N2, we are observing a high level of customer interest and engagement. Our 2-nm technology will be the most advanced semiconductor technology in the industry in both density and energy efficiency when it is introduced and will further extend our technology leadership well into the future.”
    Even with Apple’s 3nm business, 2023 is not shaping up as a good year for TSMC and revenue might fall this year for the first time in a decade. Year-over-year sales could decline by a mid-single–digit percentage point. Even with business slowing, the foundry expects capital expenditures to remain in the range of $32 billion to $36 billion.
    The Apple A17 Bionic has a die size in the range of 100-110 mm square allowing it to produce 620 chips per wafer. With a die size of 135-150 mm square, TSMC’s yield for the Apple M3 is 450 chips per wafer.

     

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  • Apple’s 5G modem will be built by TSMC using its 3nm process node

    Apple’s 5G modem will be built by TSMC using its 3nm process node

    Apple has scooped up all of TSMC’s 3nm production capacity for this year. This will be the first shipment of 3nm chips made by the world’s largest foundry. To explain in simple terms what this is all about, a lower process node means smaller transistors are used. This allows more transistors to fit inside a chip and this transistor count is important. The more transistors in a chip, the more powerful and energy efficient it is.

    For example, the A13 Bionic used in the iPhone 11 line back in 2019 was produced using the 7nm node and contained 8.5 billion transistors. The 5nm A14 Bionic used in the 2020 iPhone 12 series was equipped with 11.8 billion transistors. The following year, the A15 Bionic, made using the second-gen 5nm process node, was used on the iPhone 13 line and carried 15 billion transistors. And last year’s iPhone 14 Pro models feature the A16 Bionic. The latter was manufactured using a 4nm process node and the transistor count is close to 16 billion.

    Since Apple has wrapped up all of TSMC’s 3nm production for 2023, it makes sense to expect Apple’s in-house 5G modem to be produced using the 3nm node. According to the Commercial Times, supply chain sources state that risk production of the modem will start in the second half of this year. This is when the foundry builds chips while still working out any issues. Yields are low. That is followed by volume production. Wafer output is expected to increase slowly in the first half of next year.

    Based on this timeline, it appears that Apple will continue using Qualcomm’s Snapdragon 5G mobile chips this year. The iPhone 14 line uses the Snapdragon X65 5G modem chip while the iPhone 15 series will most likely be equipped with the Snapdragon X70 5G modem chip. This would dovetail with reports from reliable analyst Ming-Chi Kuo, Qualcomm CEO Cristiano Amon, and reliable tipster Ross Young, all of whom expect Apple to debut its in-house 5G modem chip with the iPhone 16 series in 2024.
    Apple was hoping to use its in-house 5G modem chips with the iPhone 15 series but patent issues and other problems have forced Apple to delay the launch of the component. In the summer of 2019, Apple spent $1 billion to buy most of Intel’s smartphone modem business and has been developing the component ever since.
    While Apple executives reportedly had a high opinion of the quality of Qualcomm’s modem chips, it wasn’t happy with how Qualcomm sells these chips to smartphone manufacturers. First, Qualcomm demands that customers pay for a license (no license-no chips is Qualcomm’s mantra) and Qualcomm also charges for the chips themselves.
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  • Apple has sharply reduced the size of the order it has with TSMC

    Apple has sharply reduced the size of the order it has with TSMC

    Taiwan Semiconductor Manufacturing Co. Ltd., better known as TSMC, is the world’s largest foundry. Only TSMC and Samsung currently mass-produce chips using their respective 3nm process nodes (which use different types of transistors, as we will explain later). Apple is TSMC’s largest customer and is believed to account for a quarter of the company’s revenue (that’s 25% for you numerical types).

    With the overall weakness of the global economy and the hangover from last year’s chip shortage, some major brands have been canceling orders placed earlier with TSMC. And believe it or not, that goes for Apple as well. You know that we often cite Twitter tipsters and check out social media posts from Weibo writers for the sake of alliteration. Weibo is a Chinese social media site and one subscriber, whose user name translates to something like @CellPhoneChipExpert posted some big Apple news.

    The tipster, who allegedly gets news directly from the semiconductor industry, says that Apple has reduced its orders with TSMC by as many as 120,000 wafers. The canceled orders were for chips that would be made using TSMC’s N7, N5, N4, and even some N3 nodes. Rumors call for the A17 Bionic, which is expected to be found under the hoods of the iPhone 15 Pro and iPhone 15 Ultra, to be produced using TSMC’s N3 (3nm) process node. Apple’s M2 Ultra and M3 chips might also use the same node.

    Digitimes reports that TSMC has been able to beat out Samsung Foundry when it comes to signing up customers. Samsung’s 3nm node uses Gate-All-Around (GAA) transistors that allow the gate to come into contact with the channel on all sides resulting in less current leakage and higher drive current compared to the FinFET transistors used by TSMC for its 3nm node. GAA features vertically placed horizontal nanosheets while FinFET uses horizontally placed vertical “fins.” TSMC is expected to go to GAA for its 2nm production in 2025-2026.

    Despite sticking with FinFET for 3nm production, TSMC still has a pretty full-order book with big names like Qualcomm, MediaTek, and Nvidia reserving production capacity for 2023 and 2024. Samsung, though, has been handicapped in its efforts to secure more business due to low yields. That means that a higher percentage of the chips it cuts from wafers fail to pass quality control.

    The report says that in order to give Apple most of the 3nm production capacity later this year, Intel agreed to change its roadmap and delay receipt of its 3nm orders. TSMC’s enhanced 3nm process node (N3E) could be launched this year even though there might not be a big rush for orders considering the cost.

    Digitimes points out that wafer prices have skyrocketed with 90nm wafers selling for about $2,000 in 2004. By 2016, 10nm wafers cost $6,000 and that price hit $16,000 for 5nm which debuted on consumer electronics in 2020. Wafer prices for 3nm chips are priced in the $20,000 area.

    Intel has said that it will take process leadership from TSMC and Samsung by 2025 thanks to two developments. It will use RibbonFET transistors which is another term for the Gate-All-Around (GAA) transistors already employed by Samsung. And it will use a feature known as PowerVia or backside power delivery. This allows transistors to obtain power from one side of a chip while using the other side to connect to data communication links.

    Today’s chip designs have transistors trying to handle both functions from the same side which makes the process more complicated and limits the use of miniaturization. Intel will also be the first to use high numeric aperture Extreme Ultraviolet Lithography (EUV). This machine will etch higher-resolution circuitry patterns on wafers which could reduce the time it takes to add additional features to a pattern.

  • TSMC suspends production of powerful GPU chip for Chinese tech firm

    TSMC suspends production of powerful GPU chip for Chinese tech firm

    Taiwan Semiconductor Manufacturing Company Ltd. is known throughout the planet as TSMC. The largest foundry in the world produces chips based on the designs presented to it by companies like Apple, Qualcomm, Nvidia, MediaTek, and more. In fact, Apple is TSMC’s largest customer and accounts for approximately 25% of the company’s revenue.
    TSMC currently produces powerful and energy-efficient chips such as the Apple A16 Bionic found inside the iPhone 14 Pro series, and the Qualcomm Snapdragon 8+ Gen 1 found in newer high-end Android phones including the Samsung Galaxy Z Fold 4, Galaxy Z Flip 4, and the Motorola Edge 30 Ultra. TSMC has suspended production for Chinese start-up Biren Technology.
    The reason for halting production for this company is that TSMC is following U.S. regulations that prevent it from making chips for the Chinese-based firm. Part of the reason for this is that Biren’s products outperform Nvidia’s A100 Graphics Processing Unit (GPU) silicon based on what the English language South China Morning Post calls “information in the public domain.” The U.S. is trying to keep cutting-edge chips away from China.
    This past September, the U.S. ordered that Nvidia stop shipping the A100 chip to China to “…address the risk that products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China.” The A100, according to Nvidia, is used to “power the world’s highest performing elastic data centers for AI, data analytics, and high-performance computing (HPC) applications.”
    The U.S. Commerce Department last month expressed a goal to “keep advanced technologies out of the wrong hands.” China called it a “tech blockade.” At the same time, commerce ministry spokesperson Shu Jieting said that “the U.S. continues to abuse export control measures to restrict exports of semiconductor-related items to China, which China firmly opposes.”
    Biren was trying to raise funds earlier this year at a valuation of $2.7 billion. The company designs its BR100 and BR104 processors to be competitive with GPUs designed by Nvidia and AMD that work with AI and Machine Learning models and algorithms.
    TSMC itself isn’t sure that Biren’s chips are covered by U.S. regulations but has decided to halt their production anyway. Biren, of course, says that its AI chips are not covered by U.S. export restrictions. A TSMC spokesperson made a limited statement noting that the foundry complies with all relevant rules. The U.S. Commerce Department’s Bureau of Industry and Security (BIS) announced new semiconductor restrictions on October 7th.
    A spokesperson for the U.S. Commerce Department said, “While BIS cannot comment on company-specific actions, we expect all companies to comply with export controls. Since the rule’s release on October 7, BIS has been undertaking a vigorous outreach effort to educate those impacted by it to aid compliance efforts.”
    One of the Biren GPU chips that TSMC was going to produce for the company was the BR100 GPU which was manufactured using TSMC’s 7nm process node and features 77 billion transistors in each chipset. This particular component was said to be 2.8 times faster than Nvidia’s A100.
    Export rule changes have been used before to restrict the distribution of silicon to China. A restriction announced by the U.S. Commerce Department in 2020 prevents foundries using American technology to manufacture advanced chips from shipping these chips to Huawei. The latter is considered a national security risk by both major political parties and the restriction has forced Huawei to abandon its own Kirin 5G Application Processor (AP) chips. Its current flagship Mate 50 and Mate 50 Pro handsets are powered by the Snapdragon 8+ Gen 1. While this is Qualcomm’s current top-of-the-line mobile AP chipset, the chip sold to Huawei is tweaked to prevent it from working with 5G networks.