Not long ago, some media reported that the utilization rate of TSMC's 7nm family production line has been less than 50%, and some EUV lithography machines have been shut down. The original production expansion plan has been suspended, mainly 28nm. This news has also triggered var

Not long ago, some media reported that the utilization rate of TSMC's 7nm family production line has been less than 50%, and some EUV lithography machines have been shut down. The original production expansion plan has been suspended, mainly 28nm. This news has also triggered various speculations from the outside world. Is it because of the weak consumer demand and downstream manufacturers cutting orders?

At present, TSMC official just replied simply, "No comment", but some clues can be seen from the performance of mobile phone manufacturers this year. For example, Apple plans to reduce the production of new iPhone at least 3 million units, and lower the annual mobile phone production target to 87 million units; Samsung Electronics also lowered the production target of smartphone planning production capacity in 2023 by 13%, about 290 million units.

In fact, domestic mobile phones are not much better. Earlier, an insider revealed that vivo and OPPO both reduced orders in the second and third quarters by about 20%, and Xiaomi also reduced the annual target from 200 million units to 160 million units to 180 million units. This also led to Qualcomm and MediumTek having to cut orders from TSMC. In addition, memory pellet manufacturers SK Hynix and Micro are also taking measures to save capital expenditure in order to deal with inventory problems.

It can be seen from this that the reduction of 7nm chips has a lot to do with downstream manufacturers. So, will the half-production cut have a big impact on TSMC's revenue?

According to TSMC's third quarter financial report this year, the chip of 7nm process technology contributed 26% of TSMC's revenue. With 28% of 5nm, the total revenue of chips of 7nm and 5nm process technology alone reached 54%, so the impact is actually quite big.

However, these do not seem to have caused much damage to TSMC. According to the previous TSMC financial report meeting, although the orders for 7nm chips have shrunk, orders below 5nm have been fully loaded, especially the chip demand for 3nm processes far exceeds TSMC's supply, indicating that 3nm may always be in full operation next year. In addition to 3nm chips, TSMC also said that demand for 5nm and 4nm chips is also very strong, such as AMD Zen 4's Genoa and RDNA 3's GPUs, and Qualcomm Snapdragon 8 Gen 2 will also be manufactured using 4nm processes, so TSMC believes that these more advanced process chips will also make them too busy.

Of course, this is just a unilateral statement from TSMC. Everything depends on the market consumption power next year. No matter how big the pie is, the consumption power is not strong and the advanced process is, the order volume will face the risk of order cuts.

In fact, we don’t have to envy TSMC too much. After all, chips below 7nm do not account for a high proportion of global chips. Data shows that in 2021 alone, the global consumption of chips will reach 1.15 trillion, of which more than 80% of the chips come from chips 14nm and above, while chips below 7nm only account for 10% of the market share , which means 90% of the market demand comes from chips with 7nm and above processes. This is the real reason why SMIC and TSMC have to vigorously expand the 28nm production line.

In fact, DUV lithography machines are no longer a problem. First, you can continue to purchase from ASML. Second, domestic DUV lithography machines are also constantly making breakthroughs. Some time ago, some media revealed that Shanghai's integrated industry has broken through the 14nm process technology (I don't know whether the source of the news is reliable). If it is true, it means that nearly 70% of chips will be self-sufficiency in the next few years.

According to online public information, my country's imported chips have decreased by 43 billion in the first seven months of this year, and the self-sufficiency rate of increased by 20% year-on-year compared with last year.

In addition, according to statistics from the SEMI Association, due to the impact of the relevant "ban", the losses of the US semiconductor industry this year are expected to exceed more than US$110 billion, which has also further confirmed that our domestic chips are accelerating the increase in self-sufficiency rate.

No matter what, as long as we capture the big market of consumer electronics chips, we will also capture the seven-inch Americans. We will not delay research and development of high-end lithography machine , of course, it also includes bypassing EUV lithography machine technology, which ultimately made them realize that banning the ban is just a silence.