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On January 13, TSMC held an online corporate seminar and released its financial report for the fourth quarter of fiscal 2021 as of December 31. Since 2014, when it began to increase production at 16/20nm nodes, TSMC's global foundry share has been above 50%. By the end of 2020, TSMC's share of the global foundry market will increase to 57%, and 41% of its revenue will come from nodes of 14nm and below.
The graph below shows the difference in gross profit by node, which partially explains the rationale behind TSMC's business model of shifting to advanced process nodes.
The gross profit per 300 mm wafer for the 28nm node is $2835, compared to $8695 for the 3nm node. Lu Xingzhi, a well-known semiconductor industry analyst in Taiwan, said that in 2022, TSMC's capital expenditure is expected to increase by 33%-46% compared with 2021, but depreciation expense increased by 10%-15%, which may be an important reason for TSMC's gross profit margin to approach 55%.
Image source: Seeking Alpha
At present, Samsung Electronics and Intel are also focusing on 7nm nodes, directly competing with TSMC. All three companies were part of the original investors in ASML, a supplier of lithography machine equipment, and therefore purchased multiple EUV lithography systems.
In the next five years, TSMC vs Samsung vs Intel
1. Construction of new fabs
The chart below shows the expected fab construction by TSMC, Samsung Electronics and Intel in the coming years.
This means that Samsung and Intel will enhance their competitiveness against TSMC, while TSMC will continue to build to maintain its competitive momentum.
2. Capital expenditures
Capital expenditure is the sum of construction costs and fab equipment, which is approximately 50:50 ratio. The chart below shows capital expenditures by TSMC, Intel, and Samsung between 2018 and 2023. Among them, Samsung's capital expenditure only includes OEM, excluding DRAM and NAND capital expenditure.
In 2021, TSMC was the largest spender, with capital expenditure of $28.5 billion, up 66.6% from 2020. Samsung's capital expenditures grew by only 0.2% in 2021, but its capital expenditures grew by 113.8% in 2020. Intel is expected in 2022
Capital expenditure increased by 43.2%.
Still, between 2020 and 2023, TSMC's capital expenditures are still higher than those of rival Intel and Samsung. This increase in spending will lead to increased fab capacity and chip production.
3. Node conversion
Competition among the three companies that manufacture chips smaller than 7nm will rely on product technical features from the chip design and node transition roadmap.
First look at TSMC. In terms of 4nm, TSMC launched the N4P in October 2021, which is the third major enhanced version of TSMC's 5nm family. N4P is 11% more efficient than the original N5 and 6% faster than N4. Compared to N5, N4P has a 22% increase in power efficiency and a 6% increase in transistor density. At the same time, N4P reduces process complexity and shortens the production cycle of chips by reducing the number of photomask layers. TSMC will mass-produce the 3nm process in the fourth quarter of 2022,
In terms of 3nm, TSMC still uses the FinFET architecture, and the technology research and development has been completed. TSMC recently began to officially roll off the preliminary trial production of 3nm test chips at the Fab 18B factory. TSMC plans to introduce GAA (Gate All Around) technology when it enters the 2nm process, and start mass production of 2nm process chips in 2024.
Let's look at Samsung. Samsung's foundry has already begun mass production of chips based on the 4nm process, and will begin mass production of 3nm semiconductor chips in 2022. The company's 3nm process uses a GAA design with MBCFETs (Multi-Bridge-Channel FETs) that reduces package area by up to 35 percent, improves performance by 30 percent, and consumes 50 percent less power compared to the company's 5nm EUV process.
Samsung earlier revealed that it will launch the first generation of 3nm 3GAE technology (3nm gate-all-around early) in the first half of 2022. In 2023, Samsung will launch a new generation of 3nm 3GAP technology, focusing on high-performance operations. In 2025, the 2nm 2GAP process will be put into production.
Let's look at Intel again. The company stayed on the 14nm process for 7 years, and it wasn't until 2019 that it actually mass-produced 10nm, which is equivalent to the number of transistors in TSMC's 7nm process.
Intel is renaming its future process nodes:
2022 H2, Intel 4: Formerly known as Intel 7nm. Intel expects 20% more performance per watt than the previous generation.
2023 H2, Intel 3: Formerly known as Intel 7+. Intel 3 will share some of the features of Intel 4, and Intel expects manufacturing volume in the second half of 2023 to be 18% more performance per watt than Intel 4.
In 2024, Intel 20A: Formerly known as Intel 5nm, Intel moves toward a double-digit name, A stands for ngstr m, or 10A equals 1nm.
2025, Intel 18A: Intel expects to have a 18A process in 2025. The 18A will use ASML's latest EUV, called high-NA machines, which are capable of more precise lithography.
Outlook for the next five years
Strong TSMC customer base. Based on the competition between Samsung and Intel to manufacture smaller and smaller nodes, TSMC is clearly leading the way in its roadmap. TSMC also has several leading semiconductor companies as its customers, whose growth over the past few years has been a catalyst for TSMC's performance. These include Apple, AMD, NVIDIA and Marvell.
Samsung's 2nm GAA is likely to attract more customers. Due to the multi-year contract with TSMC, Apple basically prioritized TSMC's upcoming 3nm or even 2nm nodes. But other companies can move to Samsung in the near and medium term, not because of node migration, but because Samsung will be the first to adopt more efficient GAA for its transistors of 3nm nodes that are expected to be operational in 2022. TSMC still plans to use FinFET technology for its 3nm nodes and will not migrate to GAA until its 2nm nodes. Among the customers that can be migrated are AMD and Qualcomm. It's no secret that Qualcomm split orders between Samsung and TSMC.
Conclusion The design prospect of Intel's "late but arriving"
As mentioned above, Intel is recovering its technical prowess. But at the same time, it needs to compete with AMD in the processor space. Intel will sign a contract with TSMC for 3nm production capacity in 2022. Intel is stepping up preparations to compete with TSMC once the new plant is operational. Qualcomm will begin to let Intel manufacture its chips in the future, using Intel's upcoming 20A process. Intel's technology roadmap pins its 20A process at 5nm with a rollout date set for 2024. Under the leadership of the new CEO, Intel is full of vitality, which may be a competitive advantage. (Proofreading/Hidden Drei)