There is no doubt that in recent years, in the chip manufacturing, TSMC is the leader in this field, not only occupies more than half of the market share, in the most advanced manufacturing process, TSMC has also been leading, including mass production time, mass production scale and yield rate.
New situation: “cut off” Huawei six months later, TSMC “meat pain”
We know that Huawei’s Kirin 9000 processor is from TSMC’s production, but on September 15 last year, TSMC will no longer be able to produce 5nm Kirin 9000 for Huawei.
At that time, TSMC said that although there was no more order from Huawei, but Apple filled the 5nm capacity.
This is undoubtedly telling the outside world that TSMC’s 5nm capacity will not be idle, or that TSMC will not incur losses as a result, is it really so?
New situation: “break” Huawei six months later, TSMC “meat pain”
We might as well use data to speak, recently TSMC announced its first quarter of this year’s financial results, financial data show that its 5 nanometer process contributed 14% of revenue, the first quarter revenue of $ 12.92 billion, a simple calculation shows that in the first quarter of this year, TSMC 5 nanometer contributed about $ 1.809 billion in revenue.
However, in the fourth quarter of last year, the previous quarter, TSMC’s 5nm revenue was $2.536 billion, which means that in the first quarter of this year, TSMC’s 5nm revenue was $727 million less than the fourth quarter of last year, almost more than 4.7 billion RMB.
New situation: six months after “breaking off” Huawei, TSMC “meat pain”
If TSMC’s 5nm capacity was at full capacity in the fourth quarter of last year, and then did not increase capacity or change foundry prices, then this means that in the first quarter of this year, TSMC is likely to have 30% of its 5nm capacity sitting idle, or more.
Obviously, in TSMC’s 5nm process, too dependent on Apple’s orders.
Last year in the fourth quarter Apple iPhone began to new, so it is Apple needs a lot of 5nm A14 chip, TSMC was able to make its 5nm full production, but over time, Apple’s demand for the chip will be lower, but TSMC in addition to Apple, in 5nm, it is difficult to have more big customers.
New situation: “break” Huawei six months later, TSMC “meat pain”
In the most advanced manufacturing process, the main cell phone SOC chip makers will be the first to test the water, but Qualcomm’s Snapdragon 888, Snapdragon 780G is the choice of Samsung to OEM production.
Another chip maker, MediaTek, has not yet launched a 5-nanometer chip, I do not know if it is for technical reasons or cost considerations.
In addition to cell phone chips, high-performance computer chips are also an important customer, such as AMD, but such chips are often adopted in the second year of the release of the new process.
New situation: “cut off” Huawei six months later, TSMC “meat pain”
So we speak with facts, now TSMC began to “meat pain”, but in the face of this situation, TSMC should also make a choice, because this may only be a start.
Now TSMC at least still has Apple, a major customer with the most advanced process, but we see from history that Apple is not just choosing TSMC.
That’s right, TSMC’s other big competitor, Samsung, has also worked for Apple OEM cell phone chips, in the next year will start mass production on the 3nm process, Samsung will use more advanced GAA process, while TSMC will also be the first to use FinFET process.
New situation: “break” Huawei six months later, TSMC “meat pain”
If Samsung in the 3 nanometer node, even if it caught up with TSMC, Apple will not be like Qualcomm to choose Samsung again? Or part of the order to Samsung? This is not without possibility.
I believe that we all know, as the chip process is more and more advanced, the cost of research and development is also rising.
For example, a 5-nanometer chip research and development costs about 430 million U.S. dollars, while the 3-nanometer chip will increase to 650 million U.S. dollars, which will result in what?
The result is that companies developing the most advanced process chips will reduce or delay research and development, for example, we mentioned above MediaTek, perhaps because the cost is too high, so postponed.
New situation: “cut off” Huawei six months later, TSMC “meat pain”
Such high research and development costs, coupled with the high cost of foundry production, if you can not guarantee a certain market sales, then the risk is great.
Therefore, from the point of view of the chip research and development enterprises, as far as possible to reduce production costs, can reduce their own risk, in fact, the reason why Qualcomm chose Samsung foundry, we do not exclude that there are factors of price concessions.
Apple, on the other hand, has always insisted on not putting eggs in a basket in the supply chain.
So we see such a trend, TSMC advanced process customers, will gradually present oligarchic words, customers on so many.
New situation: “cut off” Huawei six months later, TSMC “meat pain”
And the strength of competitors is not weak, in addition to the above we mentioned Samsung, there is Intel.
Some friends will say, Intel even 7 nanometers are not mass production, and TSMC’s gap is too big.
Yes, but it should be noted that we see a few nanometers, only an intuitive number, and ultimately we have to react to the integration of the chip.
That is, how many transistors can be accommodated in a unit area.
Simply put, for example, the same 10 nanometers, Intel’s technology is more integrated.
New situation: “break” Huawei six months later, TSMC “meat pain”
Although Intel is now temporarily behind, but Intel in the chip manufacturing decades of technology accumulation, we can not be directly sure that Intel can no longer exceed TSMC.
Not only that, Intel has now also adjusted its strategy, also began to enter the chip foundry market, will invest $ 20 billion.
In the face of customers towards oligarchy and instability, and the increasing number of competitors, TSMC will not be moved?
A new situation: “cut off” Huawei six months later, TSMC “meat pain”
Generally for chip foundries, capacity is given priority to stable customers, and according to previous reports, although Qualcomm will be 5 nanometer orders to Samsung, but because the market demand is too large, TSMC still accepted a number of urgent orders from Qualcomm.
And in recent months, because of the high demand for chips in the market, TSMC has also increased foundry prices, but we have not seen that increase the foundry prices of Apple chips, mainly automotive chips.
Obviously, although TSMC has the most advanced process chip manufacturing technology, but in the customer oligopoly at the moment, TSMC actually does not have a very strong voice.
Therefore, the significance of Huawei’s order, at this moment, is manifest.
New situation: “cut off” Huawei six months later, TSMC “meat pain”
Regardless of which generation of chip manufacturing process, in the initial start of mass production, the profit margin is certainly the highest, with the passage of time, the foundry profit margin will gradually decrease.
And if at the very beginning did not get the desired number of orders, then it is undoubtedly an invisible loss, reducing the net profit margin and revenue, which will be more difficult for asset-rich chip foundry companies to bear.
Now the situation is very different from before, so TSMC should make a choice!
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