This makes absolutely no sense. A month ago the headline was "Apple buys every 3 nm chip that TSMC can make for next-gen iPhones and Macs" [1]. Six months ago it was a global chip shortage that had supply chains backed up around the planet. And now it's suddenly "the world's top contract chipmaker grows increasingly nervous about customer demand"? In the middle of a revolution in AI? Something doesn't add up here.
> Six months ago it was a global chip shortage that had supply chains backed up around the planet.
chip != chip. TSMC manufactures hundreds of products, check out slide 4 of the last quarterly results [1].
"AI" (on 5nm or below) is currently only a smaller share of total capacity. 7nm was only around 50% utilization, compared to 110% a year ago.
The recent chip shortage was mostly from 28nm or above. Think automotive, and the like.
The inventory correction happening now is from a strong reduction in smartphone business, and HPC is also down thanks to PC sales declining 10-15% this year.
And there is nothing surprising about this, TSMC has been guiding this inventory correction for more than a year now.
> The recent chip shortage was mostly from 28nm or above.
As a reminder to others, 28 nm was the last planar process; there's a discontinuity in cost moving below 28 nm to FinFET processes. For applications which don't need the last bit of density of power efficiency, 28 nm is likely to stay a sweet spot for a long, long time to come.
But in 2020/2021 we had a chip shortage on 8nm. Of course demand stopped in end 2022/early 2023. of course it was because crypto got corrected downwards.
You can clearly see that in the slides
TSMC is diversified, they are basically an index. Everything from cars to medical devices to household electronics to AI uses their chips. This is why Nvidia can soar while TSMC barely moves.
We know winter is coming. The signs are all there, the desperate juicing and enshittification- growth is running out and nobody wants to blink first.
Apple buying every N3B wafer isn't enough to match the orders they placed. They had originally anticipated other customers on N3B too. But only Apple has an N3B design ready for manufacture. Intel - the only other major N3B customer - plans to use it for Arrow Lake S which is a late 2024 product. Every other major customer decided to wait for N3E because N3B is too expensive. TSMC therefore wants to push out the acquisition of additional machines until next year when N3E is ready. It's also the reason TSMC pulled in N3E a quarter or two.
The chip shortage was about common, low-cost chips made on older (i.e. larger), mature process nodes that TSMC does less business in.
As for the "revolution in AI", TSMC isn't going to spontaneously manufacture chips that nVidia and AMD haven't ordered, so your "something doesn't add up" should be directed to them. The same goes for Apple.
>as the world's top contract chipmaker grows increasingly nervous about customer demand, two sources familiar with the matter said.
I stopped reading after that.
And as someone who knew about TSMC and ASML before 99.99999% of internet even start reporting news on TSMC. Most if not all of TSMC news are just plain BS.
It's a typical boom/bust cycle, isn't it? Plus tech is going through a recession, there's less money tossed around, inflation is cray cray, people have less disposable income, etc.
I would imagine it has to do with the industry wide slump in demand that appeared earlier in the year.
> Samsung Electronics plans to cut back memory chip production as its operating profit in the first quarter of 2023 is expected to plummet about 96% from the previous year.
The global macroeconomic slowdown, memory chip oversupply and sluggish demand have hurt its profit, the world’s largest memory chip maker said in its preliminary earnings release on Friday.
I'm equally confused. I came here to say the same. One thing I'm not confident about is my understanding of this article. Is it, in fact, saying that they're slowing down production because they fear low consumer demand? I may have missed it in the article but I don't feel like it ever clearly states it like that.
Def possible I just didn't read it well but I ended my review of it still confused about whether they were worried about lack of or increase in demand
Recession kicks in. Huawei able to do 7nm...but the bulk of chip sales are at 14nm+. China in 2022 end has successfully dominated that market near 80%. The pre-order for Huawei mate 60 already reaching 10m+ just a week ago and projected to reach 60m by 2024 end. Meanwhile China pretty much banned iPhone "subtlely" by forbiding their government servants using that (which can translate to around 100m people if you read between the line meaning ccp members). The euphoric news sensations are mostly CIA Uncle Sam propaganda. If you go into labor market or ask any HR the picture aren't as rosy as what you read on the media. Also, I have very reliable source China already at 3nm just yield is very low for mass market production. They should be able to reach that around Dec 2024 though TSMC probably will announce their 2nm. So 2025 is when China on par with TSMC making the war inevitable around 2026 as many fengshui masters calculated large chaotic event in that year.
The article just obfuscates the news and hides a key detail at the end. China is a huge market for everything TSMC makes. China just showed this month that they can manufacture a near current generation flagship SoC using 90%+ domestic supply chains. This makes a big revision on future outlooks in China and ripples through demand forecast and capacity planning.
I worked in semiconductor manufacturing, and I've been exposed to a lot of other industries. It's extremely volatile. Not quite like oil and gas production, but still enough to make your head spin.
" two sources familiar with the matter said." I don't really get how an article can be built off that. Isn't that completely insubstantial on the face of it? Are we supposed to just trust that some reuters journalist is sourcing this info from a credible primary source?
This would all be information that would be under NDA and certainly not to be discussed publicly. Industry insiders leaking information under condition of anonymity is the only reason we have any idea about what goes on behind the carefully curated PR from major corporations. Reputable journalists will confirm with multiple sources and only trust reputable sources. If you don't trust the publisher or journalist, check their previous releases to see how accurate their sources tend to be.
if you read a lot of chinese news, they said 2 biggest reasons: 1. many high skill engineers out from tsmc, moved to huawei and simc. 2. tsmc fear iphone 15 sales are falling especially in china
Readit News
https://arstechnica.com/gadgets/2023/08/report-apple-is-savi...
chip != chip. TSMC manufactures hundreds of products, check out slide 4 of the last quarterly results [1].
"AI" (on 5nm or below) is currently only a smaller share of total capacity. 7nm was only around 50% utilization, compared to 110% a year ago.
The recent chip shortage was mostly from 28nm or above. Think automotive, and the like.
The inventory correction happening now is from a strong reduction in smartphone business, and HPC is also down thanks to PC sales declining 10-15% this year.
And there is nothing surprising about this, TSMC has been guiding this inventory correction for more than a year now.
[1] https://investor.tsmc.com/english/encrypt/files/encrypt_file...
As a reminder to others, 28 nm was the last planar process; there's a discontinuity in cost moving below 28 nm to FinFET processes. For applications which don't need the last bit of density of power efficiency, 28 nm is likely to stay a sweet spot for a long, long time to come.
We know winter is coming. The signs are all there, the desperate juicing and enshittification- growth is running out and nobody wants to blink first.
As for the "revolution in AI", TSMC isn't going to spontaneously manufacture chips that nVidia and AMD haven't ordered, so your "something doesn't add up" should be directed to them. The same goes for Apple.
I stopped reading after that.
And as someone who knew about TSMC and ASML before 99.99999% of internet even start reporting news on TSMC. Most if not all of TSMC news are just plain BS.
There is rarely a shortage that isn’t followed by an oversupply, so in fact it would be weird if it was different this time.
> Samsung Electronics plans to cut back memory chip production as its operating profit in the first quarter of 2023 is expected to plummet about 96% from the previous year.
The global macroeconomic slowdown, memory chip oversupply and sluggish demand have hurt its profit, the world’s largest memory chip maker said in its preliminary earnings release on Friday.
https://techcrunch.com/2023/04/06/samsung-cuts-memory-chip-p...
I think it took Samsung most of a year of production cuts to clear out excess inventory.
Def possible I just didn't read it well but I ended my review of it still confused about whether they were worried about lack of or increase in demand
I missed the news, any links on the subject?
The enshittification of Ars is the thing that "doesnt add up for you."
Middle? hasn't the hype died already?
I think we are likely seeing this to some degree.
if you're concerned about Reuters credibility (you should be, for unrelated reasons), check this particular journalist's history.
Edit: Two sources confirming stuff is not just how journalism works, but also intelligence services.
Mon, Sep 18th, Taiwan shares tumble to end below 16,700 points as TSMC hit hard
https://focustaiwan.tw/business/202309180011