TSMC Expands 3nm Production Capacity... Impact of Apple and Nvidia Demand

3nm Wafer Production Volume Expanded by Over 100,000 Units
TSMC Expects Increased 3nm Sales Share This Year

Taiwanese foundry (semiconductor contract manufacturing) company TSMC is expected to nearly double its production capacity for 3-nanometer (nm; 1 nm is one billionth of a meter) technology this year due to increased demand from customers including the US-based Nvidia.

[Image source=Reuters Yonhap News]

On the 8th, Taiwanese media outlets such as Economic Daily News and Liberty Times, citing sources, reported that TSMC is significantly expanding its 3 nm process capacity this year due to increased orders from major customers including US companies Apple, Nvidia, Intel, Qualcomm, Broadcom, and MediaTek.

TSMC plans to increase its 3 nm capacity by the end of the year, expanding wafer production from about 60,000 units last year to over 100,000 units. The 3 nm yield (the ratio of good products among finished goods) will also be raised to over 80%.

According to industry sources, TSMC made this decision as orders increased not only in smartphones but also in PCs and high-performance computing (HPC) sectors. Nvidia’s new artificial intelligence (AI) chip product "B100," scheduled for release this year, is also produced using the 3 nm process, which necessitated capacity expansion.

Since starting mass production of 3 nm chips last year, TSMC has rapidly increased its revenue sources. The share of 3 nm in fourth-quarter sales last year rose to 15%, and it is expected to account for a significant portion this year as well. With the expansion of the 3 nm share and growing AI demand, TSMC anticipates its sales to increase by more than 20% compared to last year.

Looking at January sales alone, they reached 215.785 billion New Taiwan dollars, up 7.9% year-on-year and 22.4% compared to the previous month. However, for the entire first quarter, performance is expected to decline compared to the fourth quarter of last year due to the seasonal slowdown of key customer Apple. TSMC has projected first-quarter sales between 18 billion and 18.8 billion US dollars.

Wendell Huang, TSMC’s Chief Financial Officer (CFO), explained during a conference call after the fourth-quarter earnings announcement last year, "We expect (first-quarter results) to be affected by seasonal factors in the smartphone market," adding, "This will be partially offset by continued demand related to HPC."