Intel Orders Delayed, TSMC Slows Three-Nanometer Expansion, Says TrendForce

4 August 2022 — Accord­ing to Trend­For­ce rese­arch, Intel plans to out­sour­ce the tGPU chip­set in Mete­or Lake to TSMC for manu­fac­tu­re. Mass pro­duc­tion of this pro­duct was initi­al­ly plan­ned for 2H22 but was later post­po­ned to 1H23 due to pro­duct design and pro­cess veri­fi­ca­ti­on issu­es. Recent­ly, the product’s mass pro­duc­tion sche­du­le has been post­po­ned again to the end of 2023 for some rea­son, nigh com­ple­te­ly can­cel­ling 3nm pro­duc­tion capa­ci­ty ori­gi­nal­ly boo­ked in 2023 with only a mar­gi­nal amount of wafer input remai­ning for engi­nee­ring verification.

Trend­For­ce indi­ca­tes that this inci­dent has great­ly affec­ted TSMC’s pro­duc­tion expan­si­on plan, resul­ting in Apple being the one com­pa­ny among the first wave of 3nm pro­cess cli­ents from 2H22 to the start 2023 with pro­ducts inclu­ding M seri­es chips and A17 Bio­nic. In view of this, TSMC has deci­ded to slow the pro­gress of its pro­duc­tion expan­si­on to ensu­re pro­duc­tion capa­ci­ty is not exces­si­ve­ly idle, lea­ding to mas­si­ve cost amor­tiz­a­ti­on pres­su­re. In addi­ti­on to for­mal­ly noti­fy­ing equip­ment sup­pliers of the company’s inten­ti­on to adjust 2023 equip­ment orders, due to the high cost of 3nm expan­si­on, Trend­For­ce expects that this move will also affect some parts of TSMC’s 2023 CapEx plan­ning. As a result, the sca­le of TSMC’s CapEx in 2023 may be lower than in 2022.

It is worth men­tio­ning, alt­hough Intel has signi­fi­cant­ly adjus­ted its 2023 out­sour­cing plan, causing TSMC to post­po­ne its 2023 expan­si­on plans, loo­king at other advan­ced pro­cess cli­ents inclu­ding AMD, Media­Tek, and Qual­comm, all of the­se com­pa­nies suc­ces­si­ve­ly plan to mass-pro­du­ce 3nm pro­ducts in 2024. At the same time, Apple’s new 2024 iPho­ne is expec­ted to ful­ly adopt 3nm pro­ces­sors. The intro­duc­tion of the afo­re­men­tio­ned cli­ents will inject momen­tum into TSMC’s 3nm capa­ci­ty uti­liz­a­ti­on and reve­nue per­for­mance in 2024.

Trend­For­ce belie­ves, alt­hough TSMC has deci­ded to curb its CapEx in 2023 due to the delay of Intel pro­ducts, TSMC’s annu­al reve­nue will still grow com­pa­red with 2022 but at a slower rate. The reduc­tion in CapEx can also relie­ve TSMC’s huge cost amor­tiz­a­ti­on pres­su­re and redu­ce the degree of gross pro­fit dilu­ti­on in the ear­ly sta­ge of 3nm mass production.

Loo­king for­ward to 2024, with new pro­ducts from cli­ents such as AMD, Media­Tek, and Qual­comm in place, 3nm pro­cess out­put is expec­ted to be on track, fur­ther pro­mo­ting strong growth in TSMC’s reve­nue sca­le. Howe­ver, the deve­lo­p­ment sta­tus of Intel’s own Intel 4 pro­cess and the accom­pany­ing out­sour­cing situa­ti­on are still important poten­ti­al growth dri­vers for TSMC. If Intel 4 fails to mass-pro­du­ce as sche­du­led, Intel may out­sour­ce its com­pu­ting tiles to TSMC, stron­gly dri­ving growth in 2024. Howe­ver, if the Intel pro­cess deve­lo­ps smooth­ly, the­re remains the pos­si­bi­li­ty of the com­pa­ny choo­sing to manu­fac­tu­re rela­ted pro­ducts its­elf and can­ce­ling TSMC’s orders.

For more infor­ma­ti­on on reports and mar­ket data from TrendForce’s Depart­ment of Semi­con­duc­tor Rese­arch, plea­se click here, or email Ms. Lat­te Chung from the Sales Depart­ment at lattechung@trendforce.com

For addi­tio­nal insights from Trend­For­ce ana­lysts on the latest tech indus­try news, trends, and fore­casts, plea­se visit our blog at https://insider.trendforce.com/