TSMC’s 7nm Node Supposedly Running Below Capacity
When GlobalFoundries canceled its 7nm ramp this year, it did so because it claimed it hadn’t found enough customers to justify the investment. The overall impact on AMD, GF’s major customer, was apparently negligible plans were already in the works to bring Epyc and Ryzen up on 7nm. But GlobalFoundries major justification for canceling 7nm was that there simply weren’t enough customers to go around. At the time, we asked whether we might see companies like AMD being squeezed into smaller ramps than they might like due to these issues. Now, it looks like TSMC may have the opposite problem.
A report from DigiTimes claims that TSMC will only be operating at 80-90 percent of its 7nm capacity in 2019. Supposedly Apple, HiSilicon, and Qualcomm have all cut their orders for the first half of the year. It’s not entirely clear why this would be the case. The total smartphone market grew 1.4 percent in Q3 2018 not much, to be sure, but hardly a catastrophic downturn. That small growth, Samsung’s market share fell sharply, from 22.3 percent to 18.9 percent, while Huawei grew from 9.5 percent to 13.4 percent. HiSilicon is a Huawei subsidiary and uses TSMC for its manufacturing. Qualcomm is rumored to be using TSMC for 7nm, though it’s not clear if they’re single-sourcing with the Taiwanese foundry or using both Samsung and TSMC.
Assuming the DigiTimes report is true (not an assumption you should automatically make), this could be indicative of cutbacks at Apple combined with more modest trims from other companies, or it could reflect expectations for a slower first half of the year. Semiconductor markets are typically weaker in the first half of the year than the second, thanks to the impact of holiday purchases.
As for what this means for TSMC’s other clients, that’s not clear. Foundries will always try to keep the fab running as close to utilization as possible that’s standard operating procedure for any factory. At the same time, smartphone manufacturers demand SoCs at staggering rates. There were 389 million smartphones sold in Q3 2018 worldwide, compared with 262.5 million PCs in all of 2017. Larger products like AMD’s Epyc, Nvidia’s RTX GPUs, and even AMD’s 7nm Vega all take up far more die size than your typical smartphone SoC, but not enough to account for the vast difference in total market size. There were only 52 million GPUs sold in 2017, for example. Even allowing for larger die sizes, smartphones still take the cake.
Given that we don’t know if any of TSMC’s other foundry customers are squeezed for volume, we don’t really know if this report will impact their product timelines. In theory, having limited production volume could delay a launch by forcing a manufacturer to wait longer to build a supply of inventory, so larger allocation could be helpful. The best-case scenario is that the PC-centric companies that are or might be planning 7nm launches could bring those launches forward to take advantage of the capacity increase. That’s a complex thing to plan, however, and so we wouldn’t jump to that conclusion.