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On October 5, according to multiple media reports, Taiwan Semiconductor Manufacturing Company (TSMC) has made a major breakthrough in the 2nm process node. However, the price of the 2nm process will continue to rise.
According to media reports, TSMC's price of a 300mm 2nm wafer could exceed $30,000, up from the previous forecast of $25,000 and double the price of a 4/5nm wafer.
It is also reported that the first customer to try the advanced technology of N2 is likely to be the tech giant Apple. In addition, TSMC and chip packaging company Amkor recently announced that the two companies have signed a memorandum of understanding to cooperate in chip production, packaging and testing in Arizona, United States. However, the above news has not yet been confirmed by TSMC.
Let's take a look at the detailed report.
TSMC made a major breakthrough in sudden transmission
According to multiple media reports, TSMC has made a major breakthrough in the 2nm process node and will introduce Gate-all-around FETs (GAAFET) transistor technology for the first time. In addition, the N2 process incorporates NanoFlex technology, which provides chip designers with unprecedented flexibility for standard components.
However, the above news has not yet been confirmed by TSMC.
Compared to the current N3E process, the N2 process is expected to achieve a 10% to 15% performance improvement at the same power, or a 25% to 30% reduction in power consumption at the same frequency. What's even more remarkable is that the transistor density will increase by 15%, which marks another leap forward for TSMC in the field of semiconductor technology.
However, along with the upgrading of technology, the cost has also risen accordingly. It is predicted that TSMC's price of a 300mm 2nm wafer could break through the $30,000 mark, up from an earlier estimate of $25,000. In comparison, the current price range for 3nm wafers is around $18,500 to $20,000, while 4/5nm wafers hover between $15,000 and $16,000. Obviously, the price of 2nm wafers will increase significantly.
TSMC is building two fabs to make chips using its 2nm-level process technology and spending tens of billions of dollars on ultra-expensive EUV lithography equipment (about $200 million each), among other things. In addition, the N2 process will use a variety of innovative production technologies, which will make TSMC's cost higher than N3E. In general, N2 may add more EUV lithography steps, which will increase its cost. For example, TSMC may need to return EUV dual graphics with N2, which will increase its cost, so it makes sense for foundries to pass on these additional costs to customers.
Semiconductor industry insiders pointed out that the investment in advanced processes of wafer fabs is huge. For example, more than $4 billion has been invested in R&D for the 3nm process, thanks to the support of critical supply chains. These investments have resulted in significant revenue growth for TSMC and its supply chain partners, such as IP providers and related process consumables manufacturers.
With the exponential increase in the cost of advanced process development, the IC design executive revealed the change in development cost from 28nm to 5nm process. The development cost of 28nm is about $500 million, while the investment of 16nm is $100 million. By the time it was 5nm, the cost was as high as $550 million, including IP licensing, software validation, design architecture, and more. For foundries, the investment is huge. Taking the 3nm process as an example, the research institute believes that it needs to invest 4 billion ~ 5 billion US dollars, and the cost of building a 3nm factory is at least about 15 billion ~ 20 billion US dollars.
Supply chain industry players said that the investment in advanced manufacturing process is a long and resource-consuming process, involving multiple links such as R&D manpower, equipment, software, and materials, and often takes 7~10 years. In the case of the 2nm process, for example, the path was already clear in 2016, but it was not until the recent trial production that the details of the process became clear.
With the 2nm process expected to be available in 2025, supply chain players are expected to usher in an explosive period of profitable growth. In addition, since the 2nm process requires grinding wafers to thinner, there are also medium-sand and Shengsun semiconductors cutting into diamond dishs and recycled wafers in the material side. In terms of recycled wafers, the output value of 2nm is about 4.6 times that of 28nm. As the stopper enters the advanced manufacturing process, the number of pieces will also increase. For the industry, this will be a business opportunity with both volume and price.
TSMC is the world's largest foundry manufacturer, providing chip manufacturing, advanced packaging technology and other services to customers such as Apple and Nvidia. In terms of performance, TSMC's consolidated revenue in the second quarter was NT$673.51 billion, a year-on-year increase of 40.1%, higher than analysts' expectations. Net profit recorded NT$247.85 billion, up 36.3% year-on-year, also exceeding expectations.
TSMC's August sales increased by about 33% year-on-year to NT$250.87 billion. JPMorgan Chase & Co. said TSMC's revenue so far in the third quarter has reached 68% of JPMorgan's expectations. The company's strong sales in August suggest that third-quarter results are likely to beat its guidance. The bank maintained an "overweight" rating on the stock with a target of NT$1,200.
In the secondary market, TSMC's stock price has risen by nearly 65% since the beginning of this year, and the latest market value is NT$25.34 trillion, equivalent to about 5.5 trillion yuan.
Apple's first taste?
According to reports, TSMC has planned that the N2 process will officially enter the mass production stage in the second half of 2025, and it is expected that customers will receive the first batch of chips manufactured using the N2 process by 2026 at the earliest. The first customer to try this advanced process is likely to be the tech giant Apple.
There are also analysts who believe that if the $30,000 per wafer offer is accurate, it remains to be seen whether using N2 instead of N3 (which increases performance and reduces power consumption while achieving 15% transistor density) will make great economic sense to all TSMC customers. Apple is ready to use the N2 in the second half of 2025, as it will need to improve the processors of the iPhone, iPad and Mac every year (although it is expected that these products will only get the N2 chip in 2026). Other big customers usually catch up with Apple in 1.5-2 years, so the quotation may be a little lower by then.
On Thursday, TSMC and chip packaging company Amkor announced that the two companies had signed a memorandum of understanding to collaborate on chip production, packaging and testing in Arizona, United States.
The two companies said in a press release that their factories in Arizona are very close together and will speed up the entire chip manufacturing process. Under the terms of the agreement, TSMC will use Turnkey advanced packaging and test services from Amkor's planned new facility in Peoria, Arizona. TSMC will use these services to support its customers, especially those using TSMC's advanced wafer fabrication facility in Phoenix. The close collaboration between TSMC's front-end wafer fabrication facility in Arizona and Amkor's near-end packaging and testing facility will shorten the overall product production cycle.
TSMC earlier pledged to build a $40 billion chip manufacturing plant in Phoenix, Arizona, which laid the groundwork for the deal with Amkor.
Apple confirmed last year that Amkor would package AppleSilicon chips made at a nearby TSMC factory. Tech journalist Tim Culpan recently reported that TSMC's United States factory has begun small-scale production of the A16 chip, which debuted in the iPhone 14 Pro models two years ago, and the iPhone 15 and iPhone 15 Plus models also use the A16 chip.
Source: Brokerage China
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