Morris Chang, Chairman and CEO of the world’s largest semiconductor foundry, Taiwan Semiconductor Manufacturing Company (TSMC), said in a recent earnings call that his company’s 20 nanometer process technology will outsell the existing 28 nanometer tech in its first two years. “Enough discussions have taken place, with enough customers who have large requirements (on 20nm), to lead us to believe that the volume will be very large”, he said without specifically mentioning Apple.
Of course, TSMC also makes chips for Qualcomm, Nvidia and other tech giants, but recently rumors have swirled that Apple is about to drop Samsung as a chip supplier and turn to TSMC, which will invest $9 billion this year while spending even more in capital expenditure in 2014 as it moves toward the more advanced 20nm and 16nm process technologies…
According to The New York Times, TSMC and Samsung may be a rare few foundries with enough capacity and the technology to meet Apple’s demand.
The added incentive is, TSMC solely makes chips by contract, and probably will never compete with Apple in finished consumer electronics as Samsung has.
“This is the reason that companies such as Nvidia and AMD, which actually compete against each other in PCs, both go to TSMC (to make their chips),” Patrick Liao, an analyst at Nomura Securities, said. “They never worry about technology theft.”
HSBC’s Steven Pelayo opines:
2013 is really a status quo year. Samsung ramps down, TSMC ramps up. We’ll see what happens in 2014.
The report underscores that in 2012 existing customers “oversubscribed” TSMC’s 28 nanometer output to the point of shortage in 2012. Because of this, Apple could emerge as a big customer in 2014, when TSMC’s 20 nanometer process is expected to go into full swing.
I reported last week that TSMC’s 2013 wafer shipments tripled, suggesting an Apple deal. Some watchers think Apple already commissioned TSMC to run trial manufacturing of the A6X processor which debuted inside the iPad 4 last year.
Chips based on TSMC’s 20 nanometer process will go into full production in 2014 and will be followed by a newer 16nm FinFET node in less than one year. The timing jives with a report out of China last October, claiming TSMC will start churning out iPhone and iPad processors in volume beginning with 2014.