TSMC became the biggest winner of the lack of cores The 3nm process entered risk mass production within the year

The global lack of cores has once again lifted the market value of TSM.US to a high level.

In the U.S. stock trade on January 3, TSMC rose 7.06% on the day to $128.80, and its market value reached its highest level in a year.

Goldman Sachs pointed out in a report that due to the rise in chip prices, high-performance computers (HPC)/5G in the industry upgrade cycle and other favorable factors, TSMC's growth rate in 2022 will be higher than in 2021, this year's TSMC revenue is expected to increase by 26.1% year-on-year, the target price is raised from 1028 Taiwan dollars to 1035 Taiwan dollars, the new target price means that the stock has 68% potential upside from the closing price on December 30.

The news that TSMC plans to start production of 3nm process chips in the fourth quarter of this year is also indirectly stimulating its stock price. In a previous meeting, TSMC President Wei Zhejia said that the risk mass production of 3nm processes is planned to start mass production in the second half of 2022.

At present, 5nm is an important source of revenue for TSMC. According to TSMC's third-quarter performance, 5nm process shipments accounted for 18% of the company's wafer sales in the third quarter of 2021, and 7nm process shipments accounted for 34% of the quarterly wafer sales.

Research agency TrendForce Jibang Consulting pointed out that TSMC in the third quarter of the revenue of Apple's new iPhone machine reached 14.88 billion US dollars, a quarterly increase of 11.9%, ranking first in the world, of which 7nm and 5nm are driven by the demand for smart phones and high-performance computing, and the total revenue of the two has exceeded the overall proportion of TSMC, and is in continuous growth.

From the perspective of the layout of global wafer foundries, only TSMC, Samsung and Intel are now the only ones who can compete for advanced wafer manufacturing processes. Last November, Samsung Electronics announced that it would start mass production of 2-nanometer chips from 2025, and Intel also announced plans to strengthen foundry and hope to catch up with competitors such as TSMC and Samsung by 2025.

In the face of a strong opponent, TSMC used action to make a "counterattack". On December 28 last year, news that TSMC was going to build a 2nm plant in Taiwan spread through the supply chain, which was expected to be invested in as much as NT$800 billion.

Wei Zhejia has previously revealed that TSMC's 2nm process technology will be mass-produced in 2025. In addition to the 2nm investment plan, TSMC also spent $12 billion to build a 5-nanometer chip factory in Arizona, USA. At the second quarter of 2021 results meeting, Liu Deyin, chairman of TSMC, said that the construction of the US factory has begun, and it is expected that the equipment will enter the factory in the second half of 2022.

However, the expansion of the fab's advanced production capacity does not meet the needs of current customers.

In a roadmap of Apple chips released by The Information, Apple expects to release a third-generation M series of chips based on 3nm in 2023, which are codenamed "Ibiza", "Lobos" and "Palma". Meanwhile, in the third generation of M-Series chips, the high-end version is planned to have up to 40 processor cores, and will use multi-chip packaging technology, and 40 processor cores will be distributed on four chips. In the second generation of M series chips, Apple will also plan to use TSMC's enhanced 5nm process to manufacture.

At this point, Apple's new products have almost locked in the production capacity of all advanced processes of TSMC.

According to TrendForce Jibang Consulting data, with the gradual increase in new production capacity of wafer foundries and the continuous increase in average selling prices, the wafer foundry output value in the third quarter reached $27.28 billion, an increase of 11.8% quarter-on-quarter, which has reached a record high for nine consecutive quarters. "Although the fabs have announced plans to expand capacity and build new plants, most of the new capacity has been booked just after it has been opened, and the new plant still needs time to brew." Analysts at Jibang Consulting said so.

However, the competition of chips is not only the competition for technology itself, but the competition of comprehensive resources and capabilities.

A research report by research firm IC Insights pointed out that the advanced process market will set off a fierce competition in the next few years, and the wafer foundry market will face pricing pressure. Therefore, in the case of high cost investment and the construction of fabs in various places, whether TSMC can maintain a high gross profit margin may become a new problem.