TSMC's 3nm output will grow by 300% in 2024

2024-04-06

To meet the growing demands of customers, TSMC is continuously expanding its 3nm process capacity.

Yesterday, TSMC held its 2024 annual technology forum in Taiwan, China. Senior factory manager Huang Yuan-guo, who is in charge of the mass production of the 3nm process, pointed out that TSMC's 3nm process is in high demand and supply is unable to keep up. Moreover, TSMC will build seven new factories this year, both domestically and internationally, including advanced processes, advanced packaging, and mature processes, to fully meet customer needs.

Regarding the 3nm process currently in mass production, Huang Yuan-guo noted that to cope with the strong demand for AI, the 3nm advanced process capacity will be tripled this year compared to last year, but it still falls short of order demand.

Huang Yuan-guo stated that from 2020 to 2024, TSMC's compound annual growth rate for capacity in 3, 5, and 7nm processes is 25%, the compound annual growth rate for special processes is 10%, and the compound annual growth rate for automotive chip shipments is about 50%.

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TSMC's special process also sees a stable increase in the proportion of mature products this year, from 61% in 2020, it is expected to reach 67% by 2024. The average number of factories built per year from 2022 to 2023 is five, and this year, seven factories will be built, including three advanced process wafer factories in the Taiwan region, two advanced packaging factories, and two factories overseas.

It is understood that this includes two 2nm factories in Hsinchu, one 2nm factory in Kaohsiung, one advanced packaging factory in Taichung, one in Chiayi, and the construction of the second factory in Kumamoto, Japan, and the factory in Dresden, Germany has begun.Big Customers Scramble for TSMC's 3nm Process Capacity

TSMC's 3nm process capacity is highly favored by major customers such as Apple, Intel, and AMD, with orders continuing to be hot, and TSMC's 3nm revenue also continues to grow as a result.

TSMC has always kept a low profile regarding customer order dynamics, but it is understood that in the fourth quarter of last year, the revenue contribution of TSMC's 3nm process had already accounted for about 15%.

In 2023, according to DigiTimes, Apple purchased 100% of the initial N3 supply, despite the higher costs involved, and the foundry's utilization rate declined in the first half of 2023.

Apple uses TSMC's 3nm technology to manufacture the A17 Bionic chip, which powers the iPhone 15 Pro and iPhone 15 Pro Max models. The 3nm technology offers a 35% improvement in energy efficiency compared to 4nm, which was used to manufacture the A16 Bionic chip for the iPhone 14 Pro and Pro Max.

The latter two iPhone models were the first smartphones to adopt a 4nm process chip, and it seems that Apple is once again trying to be the first to launch models based on the latest cutting-edge semiconductor technology.

Apple analyst Ming-Chi Kuo believes that the 14-inch and 16-inch MacBook Pro models to be launched in 2024 will be equipped with M3 Pro and M3 Max chips based on TSMC's 3nm process. Kuo said that the MacBook Pro models equipped with M3 Pro and M3 Max chips will enter mass production in the first half of 2024.

Compared with chips manufactured using the 5nm process, 3nm technology offers higher performance and higher energy efficiency, including Apple's current high-end Mac mini with the M2 Pro and the latest 14 and 16-inch MacBook Pro models.

This year, as major customers successively adopt the 3nm process for mass production, its revenue share is expected to exceed 20%, becoming the second-largest revenue contributor, second only to the 5nm process.

In terms of Apple's orders, this year's new iPhone 16 will be the first to carry the A18 series processor, and the latest notebook self-developed chip M4 will also be put into use. These two main chips will start 3nm production at TSMC in the second quarter.On the Intel front, its Lunar Lake series of central processors, graphics processors, and high-speed I/O chips will also enter mass production at TSMC using the 3nm process in the second quarter. This marks the first time Intel has entrusted the entire series of chips for its mainstream consumer platform to TSMC for manufacturing, representing a significant new source of orders for TSMC's 3nm process this year.

In addition, AMD will also launch a new architecture platform for Zen 5, codenamed "Nirvana," this year, which is expected to significantly enhance AI applications. As per tradition, AMD will utilize TSMC's wafer foundry services and begin production using the 3nm process in the second half of the year.

The monthly production capacity of 3nm wafers is expected to increase to 100,000 units.

TSMC's 3nm family has already started mass production with N3 and N3E, and will gradually introduce N3P, N3X, and N3AE, which is targeted at the automotive electronics market, among other processes.

According to Taiwan's Economic Daily News, due to a significant increase in AI and HPC chip orders from the six major customers - Apple, Nvidia, Intel, Qualcomm, Broadcom, and MediaTek - TSMC's 3nm capacity is fully booked until the end of the year. Moreover, TSMC is currently accelerating the expansion of its 3nm foundry capacity, with expectations to increase from 60,000 units last year to over 100,000 units by the end of this year. The main expansion will take place at the Fab 18 factory located in the Southern Taiwan Science Park.

Industry insiders have indicated that since TSMC began mass production of the 3nm process last year, the yield rate has improved to at least 80% this year. With the six major customers starting to invest heavily in wafers this year, it is expected to push TSMC's 3nm process capacity utilization rate above 80%, and it is anticipated to remain strong until the end of the year.

According to information disclosed by TSMC at its investor conference, revenue from the 3nm process already accounts for 6% of total revenue, with expectations to reach 14-16% this year. TSMC President C.C. Wei pointed out that almost all smartphone, AI, and HPC-related customers around the world are cooperating with TSMC's 3nm process, representing the most advanced technology in the industry today.Due to the growth of artificial intelligence-related industries, the demand for high-end 3nm and 5nm has increased, and TSMC is expected to see a sales growth of 20-25% this year.

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